News

A. J. Johnson to Offer Webinar on LIHTC Acquisition/Rehab Issues

A. J. Johnson will be conducting a webinar on May 6, 2021, on Acquisition/Rehab of Low-Income Housing Tax Credit Projects - Critical Issues for Success. The Webinar will be held from 1:00 PM to 3:00 PM Eastern time. This two-hour session reviews the issues that are critical to the success of any LIHTC acquisition/rehab project. The training focuses on tenant eligibility, 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 Schedule."

CDC Updates FAQS on Eviction Moratorium

On April 14, 2021, the Centers for Disease Control and Prevention (CDC) updated the Frequently Asked Questions (FAQS) regarding the CDC order to temporarily halt residential evictions to assist in preventing the spread of COVID-19. The FAQs are non-binding and are meant to outline the CDC position on the moratorium, as well as that of other agencies. The order was first issued on September 4, 2020, and has been extended a number of times, most recently on March 29, 2021. The order expires (unless extended again) on June 30, 2021. The past position of the CDC was that landlords were not required to inform tenants of the order, or to assist residents in using the order to avoid eviction. The most significant change in this update is guidance that federal law may require landlords to make their tenants aware of the Order. Specifically, the Update explains that, although the Order itself does not contain a notice requirement, the Fair Debt Collection Practices Act ("FDCPA") and the Federal Trade Commission Act ("FTCA") may require landlords or their agents to make their tenants aware of the order and that, under these statutes, evicting tenants in violation of the CDC, state, or local moratoria or evicting or threatening to evict without informing a tenant of their legal rights under such moratoria, may violate prohibitions against deceptive and unfair practices. The CDC also notes that the Consumer Financial Protection Bureau ("CFPB") and the Federal Trade Commission ("FTC") issued a joint statement in March stating that evicting tenants in violation of the CDC, state, or local moratoria or evicting or threatening to evict tenants without informing them of their legal rights under such moratoria may violate prohibitions against deceptive and unfair practices, including the FDCPA and the FTCA. Also, on April 19, 2021, the CFPB issued an interim final rule, effective May 3, 2021, that would require "debt collectors" under the FDCPA, to notify tenants of the CDC moratorium or other applicable moratoria. A "debt collector" as defined under the FDCPA is a person or party seeking to collect a debt, or rent, on behalf of a third party. This would include any company that regularly collects debt for another person or entity, and certainly applies to fee management companies. The plain language of the rule indicates that the landlord who is owed the rent would not be a debt collector, while an attorney or management company, could be a debt collector and subject to this additional notice requirement. In the updated FAQs, the CDC is encouraging landlords, even if not legally required to do so, to inform tenants of the Order. The Update also expands penalty guidance, emphasizing reporting violations to the local U.S. attorney s office or the National Center for Disaster Fraud for prosecution. Other change in the Update include: Replacing prior language with new, more direct language stating that a landlord violates the Order by executing a writ of eviction or possession that led to the actual physical removal of a covered person during the term of the Order;Clarifying that a person is likely to qualify as a "covered person" under the Order if they receive federal low-income benefits, such as TANF, SNAP, SSI, or SSDI;Clarified that "covered persons" must provide a completed and signed copy of the required qualification declaration and may include not just the landlord but property managers, attorneys, or agents of the landlord/owner or any other person with a legal right to carry out an eviction;Expanded on past language that the Order applies, broadly, to any landlord, owner of a residential property, other person with a legal right to pursue an eviction or a possessory action against a residential tenant, lessee, or resident, including an agent or attorney acting on behalf of the landlord or the owner of the residential property; andExpanded on prior language that it does not supersede state and local laws that provide the same or greater protection, as determined by the applicable court, but does supersede all state or local orders to the extent state or local laws conflict with the Order. It is likely that the CDC will take an ever more aggressive position relative to enforcement of the Order, and an extension beyond June 30 is highly likely. Based on this new guidance, it is recommended that landlords, owners, agents, and management companies discuss with their attorneys whether any revised tenant notice requirements should be put into effect.

A. J. Johnson to Host Asset Webinar

A. J. Johnson will be conducting a webinar on April 29, 2021 on Dealing with Resident Assets at Affordable Housing Properties. The Webinar will be held from 1:00 PM to 3:00 PM Eastern time. This two-hour course provides a detailed discussion of requirements related to the determination of asset value and income and applies to all federal housing programs, including the low-income housing tax credit, tax-exempt bonds, Section 8, Section 515, HOME, and Public Housing. Multiple types of assets are covered, both in terms of what constitutes an asset and how they must be verified. The course concludes with a series of problems, designed to test the ability of the attendee to determine the value of an asset and calculate the income from that asset. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule."

Affordable Housing Credit Improvement Act of 2021 Introduced in Congress

Once again, a bill has been introduced in Congress to amend the Low-Income Housing Tax Credit Program. The "Affordable Housing Credit Improvement Act of 2021" (AHCIA) was introduced in the Senate on April 15, 2021, by Senators Maria Cantwell (D-WA), Todd Young (R-IN), Ron Wyden (D-OR), and Rob Portman (R-OH), and in the House by Representatives Suzan BelBene (D-WA), Jackie Wolorski (R-IN), Don Beyer (D-VA), and Brad Wenstrup (R-OH). If enacted, the LIHTC program will be strengthened and better able to serve the Nation s affordable housing needs. The AHCIA has been introduced in each of the past three congresses, and each time has earned broad bipartisan support. While the full bill has not yet passed Congress, in 2020 a major component of the bill - the establishment of a minimum 4 percent credit rate - was passed into law. Key provisions have been reintroduced for 2021, including (1) an increase in housing credit allocations by 50% over current levels; (2) additional assistance to rural, Native-American, high-poverty, and high-cost communities, as well as extremely low-income and formerly homeless tenants; and (3) simplification of rules to make preservation of existing affordable housing easier. Some new provisions have also been added, including (1) states may choose to lower the threshold of Private Activity Bond financing from 50% to 25% in order to obtain a full non-competitive allocation of credits; (2) accelerate the implementation of the allocation increase from the previous five years to two years; (3) improve the housing credit student rule provision to clarify that formerly homeless youth and victims of human trafficking are eligible for affordable housing even if they are full-time students; and (4) update the casualty loss provision from the prior AHCIA to permit a longer rebuilding period after natural disasters, if permitted by the state agency. While this legislation has been introduced in three consecutive Congresses, the changes in both Congressional and Executive leadership increase the potential for full enactment of the Bill. We will track the status of the proposed legislation and if there are any changes, we will post an update.

A. J. Johnson Partners with Mid-Atlantic AHMA for April Training Series

During the month of April 2021, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for two live webinars intended for real estate professionals, particularly those in the affordable multifamily housing field. The following live webinars will be presented: April 21: 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 22: 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." 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.

CDC Extends Eviction Moratorium

On March 29, 2021, the Centers for Disease Control and Prevention (CDC) extended the federal eviction moratorium. The moratorium that was scheduled to expire on March 31, 2021, is now extended through June 30, 2021. As described in the order, tenants qualifying as a "covered person" cannot be evicted for nonpayment of rent when a declaration under the penalty of perjury is provided to their landlord. Residents who previously submitted a declaration should not be asked to resubmit and should have continued protections until June 30, 2021. This is the third time the deadline for lifting the ban has been pushed back. The CDC s order first went into effect in September and initially was set to expire at the end of 2020. In December, the protection was extended until January 31 and then again until March 31. Much of the content of the September 4, 2020, original order has been incorporated into the updated order. In addition to extending the effective period date, the updated order also includes newly available modeling projections and observational data from COVID-19 incidence comparisons across states that have implemented and lifted eviction moratoria, which demonstrates the ongoing health rationale for the extension. The order now applies to American Samoa because cases of COVID-19 have now been reported there. The order does not relieve the tenants of the obligation to pay rent, and tenants must continue to comply with terms under the lease unrelated to rent. Nothing in the updated order precludes that landlords from charging or collecting fees, penalties, or interest as a result of the tenants' inability to pay rent on a timely basis. Evictions unrelated to nonpayment of rent can still take place. Any State, local, Tribal, or territorial area with a moratorium on residential evictions that provides the same or greater level of public health protection supersedes the updated CDC order. To the extent the Order conflicts with prior orders, the updated Order is controlling. Renter s or Homeowner s Declaration The Order includes an attachment ("Declaration Form") that tenants, lessees, or residents of residential properties who are covered by the CDC s Order may use to claim the protection. To invoke the CDC s order these persons must provide an executed copy of the Declaration form (or a similar declaration under penalty of perjury) to their landlord. Each adult listed on the lease must complete a declaration. Federal Departments and Agencies will Aggressively Enforce the Order HUD will reach out to HUD grantees and program participants to communicate about the eviction moratorium extension and will offer guidance and support.The USDA will send notices to all Section 515 and 538 property owners to inform them of their obligations under the moratorium. USDA will require property owners to post the extension at their properties along with a template of the tenant declaration. Landlord Groups Remain Opposed to the Order Landlord groups continue to challenge the order as government overreach and say the CDC eviction moratorium puts an outsized burden on property owners, some of whom have not seen rent from tenants for a year. There are also several legal challenges to the moratorium. Some courts said the CDC has the authority to issue the order and rejected efforts to stop the ban, while others have ruled in favor of landlords. A federal judge in Ohio ruled that the CDC has overstepped its authority in issuing a nationwide eviction ban. The Department of Justice is appealing a ruling from a federal judge in Texas stating that the federal moratorium on evictions is unconstitutional. The CDC order imposes criminal penalties on landlords who violate the order, but enforcement has been almost non-existent, and there is no process for renters to file complaints against landlords who violate the order. Criminal Penalties Under 18 U.S.C. 3559, 3571; 42 U.S.C. 271; and 42 CFR 70.18, a person violating this order may be subject to a fine of no more than $100,000 if the violation does not result in a death or one year in jail, or both, or a fine of no more than $250,000 if the violation results in a death or one year in jail, or both, or as otherwise provided by law. An organization violating this order may be subject to a fine of no more than $200,000 per event if the violation does not result in a death or $500,000 per event if the violation results in a death.

HUD Publishes 2021 Income Limits

On April 1, 2021, HUD published the 2021 income limits for HUD programs as well as for the Low-Income Housing Tax Credit and Tax-Exempt Bond programs. The limits are effective on April 1, 2021.  The limits for the LIHTC and Bond projects are published separately from the limits for HUD programs. HUD has indicated that the U.S. median income limit is higher this year than it was in 2020. The median has increased by almost 2% and is now $79,900. LIHTC and Bond properties use the Multifamily Tax Subsidy Project (MTSP) limits and are held harmless from income limit (and therefore rent) reductions. These properties may use the highest income limits used for resident qualification and rent calculation purposes since the project has been in service. HUD program income limits are not held harmless. Unlike 2020, HUD is now publishing the 50% and 60% MTSP limits in the same table with the Average Income (AI) limits. AI limits are set at 20%, 30%, 40%, 50%, 60%, 70%, and 80%. Projects in service prior to 2009 may use the HERA Special Income Limits in areas where HUD has published such limits. Projects placed in service after 2008 may not use the HERA Special Limits. Projects in rural areas that are not financed by tax-exempt bonds may use the greater of the MTSP limits or the National Non-Metropolitan Income Limits (NNMIL). According to HUD, the non-metropolitan median income has gone up approximately 1.8% from 2020 to 2021. Owners of LIHTC projects may rely on the 2020 income limits for all purposes for 45 days after the effective date of the newly issued limits. This 45-day period ends on May 16, 2021. The limits for HUD programs may be found at www.huduser.gov/portal/datasets/il.html. The limits for LIHTC and Bond programs may be found at www.huduser.gov/portal/datasets/mtsp.html

IRS Issues Clarifying Guidance Relating to COVID-19 Occupancy Relief

In January 2021, the IRS published Notice 2021-12, extending and expanding on the COVID-19 relief provided by Notice 2020-53 that was issued in July 2020. Section IV.E of Notice 2021-12 provided an extension to satisfy certain occupancy obligations. It stated that for purposes of Section 42(f), "if the close of the first year of the credit period with respect to a building is on or after April 1, 2020, and on or before June 30, 2021, then the qualified basis for the building for the first year of the credit period is calculated by taking into account any increase in the number of low-income units by the close of the 6-month period following the close of that first year." Section 42(f) is "Definition and special rules relating to credit period." This section includes special rules for the first year of the credit period, including how the applicable fraction is determined for the first year. Since the applicable fraction is used in the determination of qualified basis, Notice 2021-12 seemed to indicate that the six-month extension applied to any determination of first year qualified basis. This would mean that units qualified after then end of the first year of the credit period, but within the six-month extension, would qualify for first year credits. On March 16, 2021, the IRS issued Notice 2021-17, which will be included in the April 5, 2021 Internal Revenue Bulletin. This notice provides a more precise reference citation, clarifying that Section IV.E of Notice 2021-12 applies only for purposes of 42(f)(3)(A)(ii). This section of the code stipulates that units qualified after the first year of the credit period will only be entitled to 2/3 of the credit that units qualified during the first year of the credit period may claim. This clarification indicates that increases in qualified occupancy during the six-month extension may be used to avoid two-thirds tax credits in the future but may not be used to actually claim first-year credit for units not qualified during the first year. In other words, units qualified after the first year of the credit period but within the six-month extension, will be able to claim accelerated credit beginning in the second year of the credit period. Units qualified during this extension will not be entitled to credits during the first year of the credit period.