News

A. J. Johnson to Host Live Webinar on Section 8 Management & Best Practices

A. J. Johnson will be conducting a webinar on October 19, 2021, on Section 8 Management and Best Practices.  The Webinar will be held from 9 AM to 3:30 PM Eastern time. While most Section 8 training focuses on the HUD regulations relative to the management of the properties, this session will focus on recommended and workable management practices. Covered areas will include (1) management of waiting lists and development of Tenant Selection Plans; (2) handling reasonable accommodation requests, including those relating to assistance animals and reserved parking; and (3) establishment of community policies, including pet policies, unit transfer policies, criminal screening, VAWA implementation, and fraud prevention and detection. The course will also include a full discussion of applicant qualification procedures, including how to properly verify household deductions, such as childcare expenses and medical deductions. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."

HUD Provides Clarity on the Granting of HOME Funds to Entities That Then Loan the HOME Funds

In a recent edition of HOMEfires, HUD made it clear that a Participating Jurisdiction (PJ) may not grant or provide HOME funds to an entity that then lends the HOME funds to the owner of an affordable rental project. This is because HOME statutory and regulatory requirements require the PJ to ensure compliance with HOME requirements through binding contractual agreements with the project owner. A PJ may only provide HOME funds to an entity to lend to the owner of an affordable housing development if the entity is a sub-recipient to the PJ. Background Section 226 of Title II of the Cranston-Gonzalez National Affordable Housing Act, as amended (NAHA) requires a PJ to have a contractual relationship with the owner of a HOME rental project to ensure compliance with the HOME requirements (42 U.S.C. 12756). Section 226 requires that the PJ ensure long-term compliance with the HOME statute and provide remedies for a breach through both agreements with project owners and other such measures of enforcement of HOME requirements by the PJ or beneficiaries (e.g., deed restrictions, liens or real estate, or covenants running with the land). PJs must enter into written agreements with project owners to provide the HOME funds for the development or rehabilitation of affordable rental housing and to impose HOME requirements on the project. If a PJ provides HOME funds to an entity that then lends the HOME funds to the project owner, the PJ is not providing HOME funds to the project owner but rather to an intermediary. Even if the intermediary entity imposes HOME requirements on the owner, the PJ is still in violation of the HOME statutory requirements to "ensure long-term compliance" through "binding contractual agreements with owners." If a PJ provides HOME funds under a written agreement with an entity that is not the owner, it is not a valid commitment of HOME funds under the HOME regulations. The HOME statute and regulations do not permit HOME funds to be disbursed to any entity for the purpose of then loaning the HOME funds to an owner of rental housing unless the entity loaning the HOME funds to the owner is a public entity or nonprofit acting as a subrecipient or State recipient of the PJ. Only then do the HOME regulations permit an entity other than the PJ to provide HOME funds under written agreements with owners to carry out HOME eligible activities (See 24 CFR 92.2(2); 24 CFR 92.205; and 24 CFR 92.504). Subrecipients may not loan HOME funds to an owner it owns or controls in whole or in part. Noncompliance or violations of HOME requirements may result in repayment of the HOME funds, remedies under 2 CFR 200.338, or other legally available actions against the PJ and subrecipient (but not against the owner of the project). HUD has the discretion to pursue enforcement actions for any violations. For violations that occurred prior to this guidance, HUD may require invalid agreements to be restated or non-compliant written agreements and associated documents to be assigned to the HOME PJ. HUD has indicated that they are going to pursue compliance actions for all agreements executed after the date of this guidance (September 30, 2021) that do not comply with the noted requirements.

Major Affordable Housing Legislation Introduced in the Senate

Senator Ron Wyden (D-OR) has introduced the Decent, Affordable, Safe Housing for All (DASH) Act, legislation to make a generational investment to house all people experiencing homelessness, tackle the housing affordability crisis, and expand homeownership opportunities for young people by creating a new down payment tax credit for first-time homebuyers. The Act also institutes important reforms to local zoning and housing development to encourage a re-birth in the development of affordable housing. Title II of the DASH Act implements innovative and impactful tax policy to invest in homeownership more wisely, rent support for low-income families and construction of affordable housing nationwide. One goal of the Act is to end child and family homelessness within five years by holding states accountable for wisely using the funds provided by the legislation and ensuring that public housing agencies (PHAs) continue to improve in administration of the voucher program. If fully enacted, the DASH Act could result in over three million additional homes being built in the United States in the next ten years. A significant number of the Act s elements relate to the provision of affordable rental housing, including: $10 billion for the Housing Trust Fund (HTF). This will be provided to states over a ten-year period to allow for the development of deeply affordable housing. Eligible activities will be land acquisition and the acquisition, rehabilitation or development of rental housing that prioritizes housing for people experiencing homelessness. The funding will be allocated to the states through the current HTF formula.Incentives to States: The DASH Act will provide investment in methods to increase production of affordable housing nationwide. Any jurisdiction that changes its zoning and land use practices after enactment of the legislation will become eligible for a grant award depending on the size of the jurisdiction. The funds could be used for any activity that is eligible under the Community Development Block Grant (CDBG) program. Jurisdictions that do not pass policies to increase affordable housing or that implement restrictive policies will not be eligible for the grant program.Rural Housing Reinvestment: The DASH Act invests in programs to increase and preserve the supply of available and affordable rental housing for low-income Americans living in rural areas. This will include additional funding for the Rural Development Section 515 program.Expansion of the Low-Income Housing Tax Credit (LIHTC): A major element of the DASH Act is expansion and improvement the LIHTC program and credits for additional affordable housing. These provisions are:Extend the Deadline for Rehabilitation Expenditures: Would allow up to three years (increased from the current two years), following a credit allocation, to make rehab expenditures for a LIHTC project. This would apply to buildings receiving an allocation after December 31, 2017 and before January 1, 2023.Extend the Deadline for Basis Expenditures: Would allow up to three years (compared to two under present law), following an allocation of credits, for a LIHTC building to be placed in service. The provision would also allow 24-months to meet the 10% test after an allocation of credits vs the 12-month period under current law. This would apply to buildings receiving an allocation after December 31, 2017 and before January 1, 2023.Relax the "50% Test" for Two Years: Under current law, tax-exempt bonds must comprise 50% of the financing for an affordable housing project in order to receive a 4% LIHTC allocation for the entire project. This provision temporarily reduces the 50% test to 25% and will be effective for buildings financed by an obligation of bonds issued in calendar years 2021, 2022, 2023, and 2024, and placed in service in taxable years after December 31, 2021.Expand the 9% Credit: The Act would make permanent the 12.5% expansion in the 9% credit passed in 2018 and increase the 9% credit by 50% on top of this.50% Basis Boost for Projects Serving Extremely Low-Income Households and the 10% Set-Aside: This 50% boost in eligible basis would be available for buildings that designate at least 20% of occupied units for extremely low-income tenants and limit rent to no more than 30% of the greater of (1) 30% of area median income or (2) the federal poverty line.Inclusion of Indian Areas as Difficult Development Areas: The Act would modify the definition of a Difficult Development Area (DDA) to automatically include any project located in an Indian area, making such projects eligible for the 30% Basis Boost. This provision would be limited to projects that were assisted for financed under the Native American Housing Assistance & Self-Determination Act of 1996, or the project sponsor is a qualifying Indian tribe.Inclusion of Rural Areas as DDAs: HFAs would be able to provide up to a 30% basis boost to properties in rural areas if needed for financial feasibility.Increase in Credit for Bond-Financed Projects Designated by Housing Credit Agencies: HFAs would have discretion to provide up to a 30% basis boost for tax-exempt bond financed projects if needed for financial feasibility. This benefit is currently available only for 9% deals.Repeal Qualified Contract Purchase Provision: This provision would eliminate the ability of owners of projects allocated credits after 2021 to request a qualified contract purchase. Owners of projects that received credits prior to 2021 and who submit a qualified contract request after the date of the law s enactment would have to submit the request based on the fair market value of the property - not the current QC formula.Modification and Clarification of Rights Relating to Building Purchase: The Act would (a) clarify that the existing right of first refusal (ROFR) may be exercised at the minimum purchase price and converts the right to an option. I.e., no third party offer of purchase would be required in order for the ROFR to be exercised.Prohibition of Local Approval and Contribution Requirements: This provision removes the requirement for HFAs to notify local or elected officials about the location of a proposed project. It also bars a state s qualified allocation plan from prioritizing local support (including contributions) or opposition relating to an application for a LIHTC project.Adjustment of Credit to Provide Relief from COVID-19: Many projects have suffered construction and lease-up delays from COVID-19. This provision would allow taxpayers to elect to receive a first-year credit equal to 150% of the allowable amount, to be reduced pro rata in subsequent years (there would be no increase in the total credits). Eligible buildings are those that have (1) a first-year credit period ending between July 1, 2020 and July 1, 2022 and (2) pandemic related construction or leasing delays that have occurred since January 31, 2020 (requiring certification by the taxpayer to the HFA).Credit for Supportive Services: This would provide a 50% basis boost to LIHTC projects that dedicate space to providing qualifying supportive services. This would include health services, coordination of tenant benefits, job training, financial counseling, resident engagement services, or services aimed at helping tenants retain permanent housing and promoting economic self-sufficiency.Study of Tax Incentives for the Conversion of Commercial Property to Affordable Housing: This would require the Department of Treasury, HUD, Department of Agriculture, and the Office of Management & Budget (OMB) to produce a cost-benefit analysis of providing tax incentives to taxpayers who sell vacant or under-utilized commercial real estate to State, local, or tribal housing finance agencies for conversion to affordable rental housing.Renter s Tax Credit: The Renter s Tax Credit establishes a refundable credit (under new tax code 36C) claimable by taxpayers who own and operate affordable housing. Eligible tenants will be those with gross monthly household incomes at or below 30% of area median or at or below the federal poverty line, whichever amount is greater. This matches the HUD extremely low-income level. For each eligible unit, the credit will be 110% (up to 120% for low-poverty neighborhoods) of the difference between market rent and 30% of a tenant s gross family income. The rent will include a utility allowance. The goal of this new tax credit program is to ensure that extremely low-income renters do not have to pay more than 30% of their gross monthly income in rent and utilities, while providing owners of rental housing a financial incentive to participate. The total annual credit for a taxpayer equals the number of months of reduced rent for a given taxable year times the number of eligible units, summed across all the buildings that a taxpayer owns. The credit will be available to both for-profit and non-profit owners and is a fully refundable credit. Recertifications will be required in order to determine adjustments to rent. Taxpayers will not be permitted to evict other tenants in order to rent to credit-eligible tenants. Assume market rent of $1,500. Assume a family of four with an income of $25,000. 30% of the family s income on a monthly basis is $625. The difference between the family income and the market rent is $875. 110% of $875 is $962.50. In return for holding the tenant s gross rent to no more than $625, the taxpayer would receive an annual tax credit of $11,550 ($12,600 in a low-poverty neighborhood) if the unit met the rent requirements for all 12-months of a year. This credit would be available to all units that meet the affordability test. Credits will be allocated based on population - in the same manner as the LIHTC. The amount will be $36.75 per capita in 2023, with a small state minimum. Credits will be allocated competitively and the credit period will be 15 years, with credits claimed annually. The bill requires reporting and compliance monitoring for taxpayers and states. The IRS will have the authority to develop coordination rules with LIHTC properties. Middle Income Housing Tax Credit (MIHTC): A new Middle Income Tax Credit would pick up where the LIHTC program ends. It would provide a tax credit to developers to provide affordable housing to tenants between 60% and 100% of area median income. Credits would be allocated based on population at $1.00 per capital with a $1.4 million small state minimum. Rural areas would receive an extra 5 cents per capita. Credits would be allocated by HFAs through a competitive process and would be provided over a 15-year compliance period. The credit amount would equal 50% of the present value of the qualifying costs, or 5% per year on an undiscounted basis. Only the amount of credit needed for project feasibility would be allocated.To qualify for the credit, a rental property would need to meet two affordability standards: (1) a property would have to include a minimum percentage of affordable units; and (2) rents for those units could not exceed maximum amounts based on the average incomes in the area. Specifically, at least 60% of a project s units must be occupied by individuals with incomes of 100% or less of AMGI. Tenant rents may not exceed 30% of 100% of AMGI. The affordability restrictions would remain in place for at least 15 years after the compliance period.The MIHTC may be used in conjunction with the LIHTC. However, taxpayers will have to make an irrevocable building-by-building election to use one credit or the other. The eligible basis for using the LIHTC cannot include the MIHTC basis and vice versa. The provision allows the 5% MIHTC credit to be used in conjunction with the 9% LIHTC, and a 2% MIHTC credit to be used with a 4% LIHTC.Unused MIHTC credits from a state s allocation would be added to the state s existing LIHTC allocation after one year. After a second year, unused credit will go to a national pool. Obviously, this is comprehensive legislation, and if passed, it would create a seismic shift in the affordable housing world. We ll keep an eye on it as it moves through Congress and, along with the rest of the affordable housing industry, will keep our fingers crossed.

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

During the month of September 2021, 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: September 14: 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. September 16: Basic LIHTC Compliance - This training is designed primarily for site managers and investment asset managers responsible for site-related asset management and is especially beneficial to those managers who are relatively inexperienced in the tax credit program. It covers all aspects of credit related to on-site management, including the applicant interview process, the determination of resident eligibility (income and student issues), handling recertification, setting rents - including a full review of utility allowance requirements - lease issues, and the importance of maintaining the property. The training includes problems and questions designed to ensure that students are fully comprehending the material. September 21: The Verification and Calculation of Income and Assets on Affordable Housing Properties - This five-hour course (there will be a one-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. September 23: 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 four-hour training focuses on how owners and managers may prepare for such inspections, with a concentration on HUD REAC inspections and 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. 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.

Resolving the Rights of Two Disabled Residents with Conflicting Needs

A recent case before the Iowa Supreme Court provides a glimpse into the difficulties involved in weighing the rights of two disabled residents when granting an accommodation to either would have a negative impact on the other resident. Facts of the Case A tenant with animal allergies (Cohen) moved into an apartment building due to its no-pet policies.A neighboring tenant (Clark) sought a waiver of the no-pets policy due to a disability and requested an assistance animal (a dog).The landlord allowed the support animal while requiring the two tenants to use different stairways and provided an air purifier for the tenant with allergies.The measures failed to prevent the tenant from suffering allergic attacks.The resident sued the landlord and her neighbor in small claims court for breach of lease (the no - pet provision and quiet enjoyment).The Landlord responded that fair housing law required the accommodation, and he had no choice.The small claims court dismissed the case, concluding that the landlord s actions were reasonable.The case was appealed to the District Court which concluded that the landlord should have denied the animal due to the other tenant s pet allergies but dismissed the case due to the uncertainty of the law governing reasonable accommodations.The Iowa Supreme Court accepted the case for review. Result The Court concluded that the landlord s accommodation of the support animal was not reasonable because the tenant with pet allergies was in the property first and the dog s presence posed a direct threat to her health.The Court also ruled that the tenant with allergies was entitled to recover her claims of breach of lease and awarded damages in the amount of one month s rent.The Court made it clear that this was a fact-specific case and there was no "one-size-fits-all test" that will lead to the same result with different circumstances, giving the example of a guide dog for the blind as an example where the accommodation may be required. Unique Issues of the Case The letter from Clark s psychiatrist indicated that due to "research" showing that "pets are therapeutic and beneficial to physical and mental health," his professional opinion was that Clark would "benefit" from owning and caring for a dog. He asked the apartment community to allow Clark to have a pet (Emotional Support Animal or "ESA").Management received the request for an accommodation and notified existing residents, asking if any had an allergy to dogs. Cohen responded that she did.The landlord contacted the Iowa Civil Rights Commission (ICRC) and explained that the landlord owned other properties that permitted pets and that they could rent to Clark in one of those properties.The ICRC staffer advised the landlord that moving Clark to another building was not a reasonable accommodation and that they should try to accommodate the needs of both residents.The Landlord allowed Clark to have his ESA join him on the apartment premises while trying to mitigate Cohen s allergies. In doing so, the landlord had Cohen and Clark use separate assigned stairwells in an effort to keep Cohen free of the ESA s dander. The landlord also purchased an air purifier for Cohen s apartment to minimize her exposure to pet dander inside the apartment. The landlord explored installing "air lock" doors on each of the four floors of the apartment building to reduce the amount of air infiltration but ultimately decided it was not financially feasible because the cost estimate of doing so was $81,715.92. Issues Considered by the State Supreme Court The court considered two issues in addressing the case: (1) whether the ESA was a reasonable accommodation, and (2) whether the landlord had a good faith defense because it followed the guidance of ICRC staff. The respondent argued that "it had no choice but to allow the [ESA] into the building and also try to accommodate Cohen s allergies" after consulting with the ICRC about the issue. Respondent Clark contends that allowing the ESA was a reasonable accommodation, but Cohen argues that the actions were not reasonable given the burdens they imposed on her ability to enjoy living in her apartment. One of the elements of the FHA stressed by the court was that landlords have a safe harbor in refusing a tenant s requested accommodation if the tenancy "would constitute a direct threat to the health and safety of other persons " HUD in fact has provided guidance stating "A housing provider may, therefore, refuse a reasonable accommodation for an assistance animal if the specific animal poses a direct threat that cannot be eliminated or reduced to an acceptable level through actions the individual takes to maintain or control the animal (e.g., keeping the animal in a secure enclosure)." A key element in the case is that Cohen was in the building first. As the court stated, "Where the physical or mental well-being of tenants collide, we agree with Cohen that a priority-in-time test should be applied as a factor in the reasonableness analysis. As the well-known maxim goes, first in time shall be first in right. " In this case, being first in time tipped the balance in Cohen s favor. Cohen signed her lease first. She had relied on the "no pet" policy provisions in the lease. Finding The Supreme Court reversed the district court s dismissal of Cohen s case. The holding of the court resulted from a "fact-specific balancing" required by law in assessing reasonable accommodation determinations. The court did not hold that in all cases an assistance animal should be rejected if another person in the building had allergies and would suffer from the presence of the animal. The balancing test would not necessarily produce the same result. Lessons Learned Reasonable accommodations relating to support animals require a fact-specific analysis and may include striking a balance between the rights of two disabled residents. In this particular case, the court was swayed by the principle of "first come-first served." The resident Cohen was already living in the property when Clark requested his accommodation (the support animal). Due to the unique circumstances of a support animal vs. a service animal, the court believed that there were other options available to Mr. Clark - including living in another building that permitted pets that was owned by the same landlord. Since service animals, such as those that serve the blind, become acclimated to specific buildings, if this case had involved a service animal the finding may have been different. So, what should a landlord do when an existing resident can prove that the presence of an animal will lead to significant medical problems? There is no single answer. However, I do have recommendations on how to proceed in these cases. First, if possible, try to accommodate both residents. The landlord in this case did attempt to meet the needs of both residents but was unsuccessful. This does not mean that success could not be achieved in other cases. For example, getting the two residents to agree on a "dog-free" zone, such as the community room, may be possible. Especially if failure to reach such an agreement could result in the landlord denying the request for the assistance animal. Second, if the reconciliation process does not work, apply the "priority-in-time" test. The decision may well tip in the favor of the resident that was living in the property first. Third, if the property is a pet-free property, and someone (whether a new or existing tenant) requests an assistance animal, let the existing residents know that due to the requirements of the law, consideration is being given to allowing a dog in the building. Do not provide details regarding the resident requesting the animal or reasons why the animal is needed. If, as was the case here, an existing resident can prove a detrimental effect, granting the request would not be reasonable and should probably be denied. In this case, the "interactive process" with the applicant or resident who requested the animal would be required. This means that the landlord is obligated to work with the requester to try to find another solution (e.g., living in another building owned by the landlord). Finally, in buildings that are pet-free and already have assistance animals in place, new residents should be informed that the building does contain assistance animals. This would give notice to anyone with allergies to animals that they may want to consider alternative living arrangements. This case is a perfect example of the difficulties involved with the approval of assistance animals - especially support animals. Landlords must remember that each case must be considered on its own merits and that the rights of existing residents do play a role in the decision-making process. The landlord in this case was in a "no-win" situation, in that no matter what decision they made, a challenge was likely. The case does provide some guidance - and precedent - if faced with this particular situation and is instructive in the specific circumstance involving the rights of two disabled individuals.

CDC Extends Eviction Moratorium

The Centers for Disease Control and Prevention ("CDC") issued an order on Tuesday, August 3, 2021, that - after a short interruption - seeks to extend its prior eviction moratoriums, originally imposed in September 2020. The newest moratorium will expire on October 3, 2021, is intended to bridge the gap between public health concerns and judicial opinions questioning whether the federal government - including the CDC - has the legal authority to impose an eviction moratorium on properties with no federal assistance. The new moratorium is more focused in that it applies only to jurisdictions with "substantial" or "high" levels of COVID-19 outbreaks. Given the widespread distribution of the Delta variant of the virus, this essentially covers the entire country. The legal rationale for the initial September 2020 eviction moratorium was the CDC s authority to take action to interdict the interstate transmission of infectious materials. The CDC took the position that tenant evictions in the middle of a pandemic would accelerate the spread of COVID-19, as tenants moved across state lines to seek housing in shelters or with family members or friends. During a time when social distancing was still the primary public health response to the pandemic, the CDC moratorium recognized a basic reality - if people stayed home, the spread of the virus would be reduced. Unfortunately, the CDC interpretation of the law giving them authority in this area was tortured at best. The law authorizes the CDC to impose measures such as "inspection, fumigation, disinfection, sanitation, pest extermination, and destruction of animals." It does not give the authority to freeze the rental housing market for months in virtually the entire country. In general, courts have taken the position that the CDC overreached. Some courts stated that the CDC s authority to restrict the transmission of infectious materials was too limited to support a nationwide moratorium on tenant evictions. Other courts went farther, arguing that the federal government had no constitutional authority to interrupt issues of landlord-tenant law that are universally controlled by state laws. Recently, the Supreme Court declined to take up the case, arguing primarily that since the Moratorium would expire at the end of July and billions of dollars of Emergency Rental Assistance Program (ERAP) funding would be available to prevent evictions, participation of the Court was not necessary. (It should be noted that nationally, only a fraction of the ERAP funds - less than 7 percent - have been used). This new CDC order is basically making the argument for the moratorium by showing the threat posed by the Delta variant and how an eviction moratorium will slow the spread of the variant. The CDC order includes a link of areas with widespread outbreaks, but it is an absolute certainty that this order will cause great confusion among landlords and will almost certainly be challenged in the courts. Landlords should obtain a copy of the order and try to determine if they are impacted by the order based on location - approximately 80% of counties will come under the order.

A. J. Johnson to Offer Live Webinar on Criminal Screening Policies in Multifamily Housing

A. J. Johnson will be conducting a webinar on August 31, 2021, on Criminal Screening in Multifamily Housing - Recommended Policies & Procedures.  The Webinar will be held from 1:00 PM to 2:30 PM Eastern time. Property owners may (and should) screen applicants for criminal behavior but must be careful when doing so - and must have transparent and defensible policies relative to screening for past criminal conduct. This 1.5-hour webinar will assist owners and property managers in understanding what is required when implementing a criminal screening policy. The training will outline the HUD guidance relative to criminal screening and will review the type of policies that are - and are not - acceptable. The discussion will center on (1) the types of crimes that are appropriate for screening; (2) the HUD policy regarding the use of arrest records in criminal screening; (3) dealing with convictions for non-dangerous crimes; and (4) the use of individual assessments for rejected applicants. Following the session, participants will be better prepared to develop a criminal screening policy that will not run afoul of fair housing law. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."

The Sovereign Citizens Movement and Affordable Housing

A number of our clients have contacted us recently to ask how to handle the applications of individuals who claim to be "sovereign citizens," and state that the government has no right to verify their eligibility for affordable housing, such as Section 8 or LIHTC. I have seen this often enough lately that an article on sovereign citizens and how to handle them for affordable housing eligibility purposes is warranted. Sovereign Citizens believe that they - not judges, juries, law enforcement, or elected officials - should decide which laws to obey and which to ignore. Most sovereign citizens also don t believe they should have to pay taxes. The contemporary sovereign belief system is based on a decades-old conspiracy theory. Sovereigns believe that the American government set up by the founding fathers, under a common-law legal system, was secretly replaced. They think the replacement government swapped common law for admiralty law, which is the law of the sea and international commerce. They follow the basic precept that U.S. judges and lawyers are foreign agents who deny the court challenges of sovereigns out of treasonous loyalty to hidden and illegitimate government forces. It is impossible to know how many sovereigns there are in the U.S. today, in part because there is no central leadership. There are a variety of local leaders with individualized views on sovereign citizen ideology and techniques. Their recommendations often include tax evasion, adverse possession (squatting on a property that does not belong to them), or ignoring laws regarding driver's licenses, vehicle registration, or license plate possession. They base these activities on their belief that free men and women, as they call themselves, are not bound by the laws in question. It is estimated that there may be as many as 500,000 sovereign citizens, with a hardcore group of about 100,000. When sovereigns are angry with government officials (or others who deny their rights as sovereigns), their revenge most often takes the form of "paper terrorism." Sovereigns file retaliatory, bogus property liens that may not be discovered by the victim until they attempt to sell or mortgage their property or take out a loan. These liens can be for millions of dollars. For this reason, it is recommended that property owners who reject the application of a sovereign due to their refusal to verify eligibility check for possible liens against the property for a period of one to two years after the rejection. Sovereigns have also signed up for Section 8 as landlords for properties they do not own. Over the course of four years, the Department of Housing & Urban Development (HUD) has recovered $17 million from sovereigns for housing-related fraud. Despite what they may believe, so-called Sovereign Citizens are not exempt from federal, state, or local law. If such a person applies for occupancy at an affordable housing property of any type, including HUD, Rural Development, or LIHTC, they are subject to the same rules as any other person. They must be able to demonstrate eligibility based on verified information and must submit to the same screening and occupancy criteria as any other applicant. Due to the nature of their beliefs, when dealing with such individuals, managers should contact their corporate office and involve their attorney in the process.