News

A. J. Johnson to conduct a webinar on Interviewing Skills for Affordable Housing Managers.

A. J. Johnson will be conducting a webinar on October 7, 2020, on Interviewing Skills for Affordable Housing Managers. The Webinar will be held from 1 PM to 4 PM Eastern. One of the most important skills any affordable housing manager can possess is the ability to interview applicants and residents and obtain the information required to determine eligibility - this is also one of the greatest weaknesses of most affordable housing managers. This training has been developed to address that weakness. This half-day session focuses on the interview process and provides concepts and tools that will aid managers as they conduct their interviews. Techniques apply to all interview settings including initial eligibility interviews, interim certifications, and annual recertifications, and will provide tips for successful "virtual" interviews. The primary emphasis is on the initial eligibility interview since it is so critical to the housing process. The skills taught during this session will also assist managers in detecting fraud and in dealing with third parties when resolving discrepancies. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training."

A. J. Johnson to Host Webinar on Critical Policies for Affordable Housing Developments

A. J. Johnson will be conducting a webinar on October 6, 2020, on Critical Policies for Affordable Housing Developments. The Webinar will be held from 10 AM to 3 PM Eastern. As important as it is to understand the technical requirements of compliance for affordable housing programs, it is equally as important to have sound operational policies in place. This 5-hour training reviews the critical operating and liability policies that every affordable housing property should have. A full discussion of the following policies is included: Management Plans, Property Policies (House Rules), Resident Transfer Policies, Waiting List Management, Sexual Harassment Policy, Criminal Screening, Reasonable Accommodations, VAWA, and Fraud Prevention & Detection. The training concludes with a discussion of the special issues relating to "layered" projects. The training is intended for site staff as well as supervisory and compliance personnel. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training."

A. J. Johnson to Host Webinar on Management of Rural Development Section 515 Properties

A. J. Johnson will be conducting a webinar on October 8, 2020, on The Management of Rural Development Section 515 Properties. The Webinar will be held from 9 AM to 3 PM Eastern. This full-day course outlines the basic requirements of the Rural Development Section 515 Program, with particular emphasis on combining the Section 515 program with the federal Low-Income Housing Tax Credit. The training provides an overview of Section 515 Program regulations, including rent rules, resident eligibility, income restrictions, waiting list management, and recertification requirements. The session will also include a discussion of management/tenant relations - including tips on how to deal with difficult residents. The course includes a detailed discussion of combining Section 515 and tax credits, focusing on occupancy requirements and rents, tenant eligibility differences, handling over-income residents, and monitoring requirements. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training."

Justice Department Settles Accessibility Case with Major Developer

The Department of Justice (DOJ) and the U.S. Attorney for the Southern District of Ohio announced on July 28, 2020, that the owners, developers, and builders of 82 multi-family housing complexes have agreed to make extensive modifications to their properties and pay $475,000 to resolve claims that they violated the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA) by designing and constructing apartment complexes that are inaccessible to persons with disabilities. This agreement in the case of the United States of America v. Miller-Valentine Operations, et al resolves one of the largest housing accessibility lawsuits the DOJ has ever filed. The housing complexes at issue are located in Illinois, Indiana, Iowa, Kansas, Kentucky, Missouri, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, and West Virginia, and contain more than 3,000 units that are required to have accessible features. Under the terms of the settlement, the defendants must take extensive corrective actions to make the complexes accessible to persons with disabilities. These include replacing excessively sloped sidewalks, installing properly sloped curb ramps, providing sufficient room for wheelchair users in bathrooms and kitchens, and removing accessibility barriers in public and common use areas. The settlement also requires the defendants to receive Fair Housing and ADA training, to take steps to ensure that their future developments comply with the laws, and to provide periodic reports to the DOJ. Many of the complexes were built under the Low-Income Housing Tax Credit (LIHTC) program. The case indicates the importance of adhering to federal requirements relative to the design of apartment communities in so far as the requirements relate to accessibility. All owners should review the design of their properties to ensure compliance with the accessibility requirements of the Fair Housing Amendments Act of 1988. These requirements apply to covered housing that was built for first occupancy on or after March 13, 1991.

CDC Issues Emergency Order Halting Residential Evictions

On September 4, 2020, the Centers for Disease Control and Prevention (CDC) published an Agency Order for a Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19. This order is issued under Section 361 of the Public Health Service Act and applies to all residential rental properties in the United States. Background The virus that causes COVID-19 spreads very easily and sustainably between people who are in close contact with one another (within about six feet), mainly through respiratory droplets produced when an infected person coughs, sneezes, or talks. COVID-19 presents a historic threat to public health. In response to this threat, Federal, state, and local governments have taken unprecedented actions, including border closures, restrictions on travel, stay-at-home orders, mask requirements, and eviction moratoria. Despite these efforts, COVID-19 continues to spread and the CDC believes that more aggressive action is needed. Eviction moratoria facilitate self-isolation by people who become ill or who are at risk for severe illness from COVID-19 due to an underlying medical condition. They also allow State and local authorities to more easily implement stay-at-home and social distancing directives to mitigate community spread of COVID-19. Such moratoria also reduce homelessness by limiting the number of persons that will be forced into homeless shelters or other congregate settings. Applicability of the Order Under this Order, a landlord, owner of a residential property, or another person with a legal right to pursue eviction or similar action, shall not evict any covered person from any residential property in any jurisdiction to which the order applies. This order does not apply to any jurisdiction with a moratorium on residential evictions that provides the same or greater level of public-health protection than the requirements provided in this Order. The Order also does not apply to American Samoa, which has reported no cases of COVID-19. The Order is a temporary eviction moratorium and does not relieve any individual of any obligation to pay rent, make a housing payment, or comply with any other obligation that the individual may have under a tenancy, lease, or similar agreement. The order also does not preclude landlords from collecting fees, penalties, or interest as a result of the failure to pay rent or other housing payments when due. The order does not include foreclosure on a home mortgage, nor does it include hotels, motels, or other guest house rented to a temporary guest or seasonal tenant. 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. This order is in effect - unless extended - through December 31, 2020. Tenants may be evicted for reasons other than payment of rent or making a housing payment. In order to avail themselves of this protection, residents must provide a declaration under penalty of perjury indicating that: The individual has used best efforts to obtain all available government assistance for rent or housing;The individual either (i) expects to earn no more than $99,000 in annual income for calendar year 2020 (or no more than $198,000 if filing a joint tax return), (ii) was not required to report any income in 2019 to the IRS, or (iii)  received an Economic Impact Payment (stimulus check) pursuant to the CARES Act.The individual is unable to pay the full rent or housing payment due to substantial loss of income, loss of compensable hours of work or wages, a lay-off, or extraordinary out-of-pocket medical expenses;The individual is using best efforts to make timely partial payments that are as close to the full payment as the individual s circumstances permit, taking into account other nondiscretionary expenses; andEviction would likely render the individual homeless - or force the individual to move into and live in close quarters in a new congregate or shared living setting - because the individual has no other available housing options. This Order goes well beyond the eviction moratorium under the CARES Act, which only protected renters living in federally assisted properties, and increases the number of protected persons by 30-40 million. 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 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 death or $500,000 per event if the violation results in death. Summary This Order applies to all landlords - not just those with some type of federal assistance at their property. While the order does not waive or forgive in any way rent that may be owed, or the collection of any fees relating to that rent, it also provides no relief to landlords relative to cash flow shortfalls as the result of the failure of residents to pay rent. For this reason, landlords should familiarize themselves with any local, State, or Federal assistance that may help in offsetting the loss of income due to non-payment of rent. Also, landlords are not required to inform residents of this Order, nor are they required to inform residents of the steps that must be taken in order to request the relief afforded by this Order. Finally, residents are not entitled to the relief granted by this Order unless they provide the Declaration of need, as outlined in the Order.

Claiming Credit Without an 8609 - Impact of the Centralized Partnership Audit Regime

The Bipartisan Budget Act of 2015 created the Centralized Partnership Audit Regime (CPAR). This created a new process for amending or making changes to certain federal partnership tax returns for effective years beginning after December 31, 2017. As a result, most partnerships (including those owning LIHTC projects) are no longer allowed to amend a tax return after its extended due date. Instead, a partnership will do an Administrative Adjustment Request (AAR). In the past, if 8609s were delayed, tax returns were amended and credit was claimed in the applicable tax year. Under CPAR, the investor will have to claim the credit on the tax return for the year in which the AAR is filed. For example, a partnership placed buildings in service during the 2018 tax year and intended to claim credits in 2018. However, the state did not issue 8609s until January 2020 and the extended due date for the 2018 return was September 15, 2019. Under prior law, an amended 2018 return would have been filed to offset 2018 taxes. Under CPAR, the credit is claimed on the 2020 return, delaying the tax benefit by two years. The investor response in these cases may be to impose a penalty on the general partner (GP) and reduce equity. Issuing an 8609 even one day after the return due date will have this effect. Because of this new rule, some investors are examining the risk of claiming credit before issuance of the project 8609s. There is most definitely risk associated with claiming credit before credit has been allocated (the 8609 is the Allocation Form). However, there may be circumstances where the claiming of credit before receipt of an 8609 may be possible. There are several problems with claiming credit without an 8609, beginning with the preparation of the 8609-A. Line C of this form asks whether the taxpayer has the original 8609 in his or her records. If answered "no," the IRS may follow up for clarification, with the assumption that the property is subject to credit disallowance. IRS Chief Counsel Advisory 200137004 stated that once a Form 8609 is issued by an HFA, taxpayers may file amended returns to claim credit for taxable years prior to the year in which the Form 8609 was issued. However, the ability to do this has been impacted by the current tax rules. This same CCA includes two examples of when the credits may be disallowed due to the lack of an 8609. Unless it is shown that claiming credit without the first-year certification is due to "reasonable cause" and not to willful neglect, no credit is allowable for any year before the issuance of the 8609. The Code does not provide examples of "reasonable cause," but in United States v. Boyle, the court said that the taxpayer bears the heavy burden of proving both (1)that the failure did not result from willful neglect, and (2) that the failure was due to reasonable cause Congress intended to make the absence of fault a prerequisite to avoidance of the late filing penalty. A taxpayer must, therefore, prove that his failure to file on time was the result neither of carelessness, reckless indifference, nor intentional failure." Treasury Regulation 301.6651-1(c)(1) provides that, to demonstrate "reasonable cause," a taxpayer filing a late return must show that he "exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time." In the context of claiming credit without an 8609, the taxpayer would be expected to show that they exercised ordinary business care and prudence in determining its tax obligations but is unable to comply with those obligations. Guidance from the IRS regarding claiming credits without an 8609 indicates that the following questions would be asked: 1. How long after the end of the first year of the credit period did the taxpayer receive the Forms 8609 from the HFA? 2. How many years has the taxpayer claimed credit without completing the 8609? 3. How did the taxpayer answer question C on the Form 8609-A filed with the tax returns? 4. Did the taxpayer encounter other difficulties while noncompliant with 42(1)(1) certification requirement, and how were the problems resolved? 5. What reason did the taxpayer give for the delay? To show reasonable cause, the dates and explanations should clearly reflect efforts to timely resolve the problems and expeditiously obtain the Forms 8609 from the HFA. 6. Did the taxpayer know or make reasonable attempts to determine the Code certification requirements? 7. Is the GP a professional specializing in the development and management of 42 properties? 8. Did the taxpayer make a mistake that delayed issuance of the 8609s? Generally, errors do not provide a basis for reasonable cause, but additional facts and circumstances may support such a determination. Forgetfulness, oversight, or reliance upon another person does not support a determination of reasonable cause. 9. Death, serious illness, or unavoidable absence of the taxpayer may establish reasonable cause. Consider the relationship of the responsible party to the partnership; the dates, duration of the illness or absence; how the even prevented compliance; whether other business obligations were impaired; and whether the noncompliance was remedied within a reasonable period after a death or absence. The taxpayer bears the burden of demonstrating that the failure did not result from willful neglect and that there was a reasonable cause for failing to complete the 8609 before the due date of the first tax return on which credit was claimed. A taxpayer may argue that delays were caused by the state agency responsible for completing the 8609s. A taxpayer is not subject to credit disallowance or recapture because an HFA failed to timely provide executed Forms 8609 (see IRS Audit Technique Guide, page 4-7). The evaluation should be made based on the individual facts and circumstances of the case and the taxpayer s actions. The issue is whether there is a "reasonable cause" for any delays caused by the taxpayer and whether the taxpayer s failure resulted from willful neglect. So, while a taxpayer may decide to claim the credit without a signed and filed 8609, they should be prepared to affirmatively defend the decision if challenged by the IRS. It would seem that if the taxpayer can show that the HFA unreasonably delayed issuance of the 8609 - through no fault of the taxpayer - the affirmative defense test would be met. However, this is by no means an absolute, and if it is determined that the taxpayer could not establish a reasonable cause for the failure to provide the first year certification (i.e., 8609) prior to claiming credit, the IRS will disallow prior credit and consider the imposition of penalties under IRC 6701. A better option is to work closely with the HFA to ensure timely provision of the 8609s.

Court Decision Restates Owner's Right to Information Relating to Accommodation Request

A recently decided Indiana case once again makes it clear that landlords have the right to request certain information to determine that an accommodation request for a disabled person is both reasonable and necessary due to the disability of the applicant or resident. In Furbee v. Wilson, 2020 Ind.App. LEXIS 122, March 2020), the court ruled in favor the landlord with regard to the request for an assistance animal. Facts of the Case Despite a community s no pet policy, a resident requested to have a cat as a support animal.The resident provided a letter from a licensed therapist stating that the resident was disabled and needed an emotional support animal to alleviate her symptoms.The letter did not identify any disability or symptoms.The community requested more information from the resident, which the resident failed to provide.The resident brought the cat into the unit and was evicted for doing so.The resident filed a complaint with the state civil rights commission, which sued the community for failing to accommodate the resident s request for the support animal in violation of state fair housing law.The community requested judgment without trial which was refused by the court.The community appealed. Decision In March 2020, the Indiana appeals court reversed the lower court, ruling that the fair housing case against the community should be dismissed. Reasoning Fair housing law does not require that housing providers immediately grant all accommodation requests.Before a community can decide on a resident s request for accommodation, it is entitled to conduct a "meaningful review" to determine whether the accommodation is required.This review may include requesting documentation and opening a dialogue (the "interactive process.")In this case, the community requested more information, but the resident did not respond.By not providing the community with information about her disability and disability-related need for the accommodation, the resident caused a breakdown in the process.Without this basic information, the community could not conduct a complete review of the resident s request for the support animal.Based on this, the court stated that the community was entitled to judgment without trial. The Takeaway While owners must grant reasonable accommodations to disabled residents when necessary for the resident to have full use and enjoyment of the property, and it is reasonable to do so, owners do have the right to request additional information when the need for the accommodation is not obvious.  In this case, while the therapist did state that the resident was disabled and an animal could ease the symptoms of the disability, the letter did not identify any disability. In this case, since the landlord was unaware of the tenant s disability, it had the right to request more information demonstrating a clear relationship between the disability and the need for the accommodation - i.e. the support animal. The overriding issue in this decision was the failure of the tenant to participate in the interactive process, thus creating a "breakdown in the process." Based on the facts, this case could have gone either way, but it does indicate that landlords have the right to request the information needed to make an informed decision as to whether or not to grant an accommodation.

Mandated Mask Wearing in Apartments Must be in the Form of a Written Policy

More and more apartment owners and managers are considering mandating the wearing of masks for residents, guests, and others in common areas of apartment communities. While such a policy makes good sense from a public health perspective, it cannot be implemented arbitrarily or on an ad hoc basis. Even federally assisted properties such as HUD or Rural Development are allowed to require residents to wear face coverings at the property and may treat a resident s failure to do so as a lease violation - as long as modifications to the lease or property policies have been made. While no property is required to have policies outside the actual lease itself, it is a good idea to do so. But, such policies must be attached as a lease addendum and should be maintained in the file of each resident. These policies generally outline specific conduct required of all residents, in more detail than would generally be in the lease itself. Typical items in property policies include issues relating to safety, noise, pest management, pet rules, car washing, security, and trash disposal. House rules relating to face coverings should be reasonable and consistent with state and local law as well as public health guidance. The latest HUD update to its COVID-19 guidance says changes to property policies - or "house rules" as HUD calls such policies - may be sent to the local HUD office or Performance-Based Contract Administrator (PBCA) for review. While approval of these policies is not something that normally must be sought from HUD or the PBCA, they can guide whether the proposed rule violates any HUD statutory, regulatory, or programmatic requirements. At HUD properties, owners and agents (O/As) must notify existing tenants, who have completed their initial lease terms, of modifications to house rules 30 days prior to implementation. Tenants who have not yet completed their initial lease terms must be notified 60 days prior to the end of their lease (see HUD Notice H2012-22). Failure to comply with a site s face covering requirements may be treated as a lease violation only if the policy is reasonable and consistent with state and local law and directives. Also, the house rules must be identified in the lease as an addendum or attachment to the lease. While the wearing of face masks may be mandated, there are several requirements that may not be made of residents. For example, owners may not require tenants to take a health or medical test and disclose results. Landlords may certainly encourage, but not require, tenants, to get testing and disclose the results. From a public health perspective, there is little doubt that the wearing of face masks assists in preventing the spread of COVID-19, and requiring it in common areas of apartment communities is sound policy. But, as noted here, it must be done according to state and local law, and for HUD properties, following HUD guidelines.