News

HUD Releasing $800 Million in CARES Act Assistance for Section 8 Properties

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides $1 billion of additional appropriations to Project-Based Rental Assistance (PBRA) to prevent, prepare for, and respond to coronavirus, including to maintain normal operations and take other necessary actions during the time that the program is impacted by the COVID-19 pandemic. On May 28, HUD completed funding actions to provide $800 million of CARES Act supplemental appropriations to approximately 16,500 properties with Section 8 PBRA contracts to maintain normal operations. This money, in addition to amounts appropriated under the FY 2020 appropriations Act, will help compensate owners for decreased tenant rent payments resulting from reductions in tenant income. The funds will also assist in covering increases in vacancy payment claims that may occur due to COVID-19 related delays in moving in new tenants. Owners will receive automated notifications through TRACS/ARAMS that funds have been obligated on HAP contracts. Owners/Agents (O/As) do not need to take any special actions to access these CARES Act funds. O/As should follow current protocols for interim tenant recertifications when a loss of income is reported and voucher for subsidy accordingly. A notice (or notices) describing the allocation methodology and the requirements governing the remaining $200 million of CARES Act PBRA supplemental funding will be released by HUD shortly. A small percentage of owners will receive more than $150,000 in funding. The CARES Act requires monthly reporting in these cases. HUD will work to ensure that this requirement can be fulfilled by recipients in a manner that utilizes to the greatest extent possible existing reporting streams with minimal additional burden. O/As should contact their assigned account executive at HUD with any questions regarding CARES Act funds.

A. J. Johnson Partnering with Mid-Atlantic AHMA for Affordable Housing Webinars

A. J. Johnson is partnering with the Mid-Atlantic Affordable Housing Management Association (Mid-Atlantic AHMA) in a series of webinars relating to the development and operation of affordable housing properties. Upcoming webinars include: June 9: Section 8 Management & Best Practices;June 10: Intermediate LIHTC Compliance;June 11: Update on IRS/HUD Guidance to be followed by a two-hour webinar on Issues Relating to the Acquisition & Rehabilitation of LIHTC properties;June 23: Dealing with Income & Assets on Affordable Housing Properties; andJuly 9: Advanced Issues Relating to LIHTC Compliance Requirements. For information on these webinars or other training offerings by A. J. Johnson Consulting Services, please visit our website (www.ajjcs.net) and click on training.

Warn Residents of COVID-19 Scams

Scammers, fraudsters, and other criminals are taking advantage of rapidly changing data and facts associated with COVID-19, both in the workplace and in our homes. Government agencies, corporations, and news outlets continue to warn individuals to be mindful of increased fraudulent activities during these uncertain times. These scams, which can be sent via email, text message, and social media claim to provide COVID-19 updates, sell products, ask for charitable donations, or reference government aid packages. These messages appear to be legitimate in nature but seek to fraudulently obtain personal information, financial gain, and create panic. Proactive property managers and owners of multifamily housing should consider notifying residents of these potential scams and providing the following tips as a way to avoid these traps: Watch for emails claiming to be from the Centers for Disease Control and Prevention (CDC) or experts claiming to have inside information on the virus. There are currently no vaccines, potions, lozenges, or other prescriptions available online on in-store to treat or cure COVID-19.Do your homework prior to donating to charities or crowdfunding sites. Confirm the validity of the organization as fraudsters are now advertising fake charities. Do not let anyone rush you into a donation, particularly those who ask for cash, gift cards, or wiring of funds.Do not click on links or open attachments from sources you do not know. Cybercriminals are using the COVID-19 headline as a tactic to spread computer viruses and steal information. Do not provide personal information, payment information or sensitive workplace information via suspicious email addresses.Be suspicious of urgent demands and emergency requests. The health and safety of you and your family is the top priority. Do not fall for scammers threatening fees or fines, cancelled deliveries, and health concerns in exchange for financial gain.If it should too good to be true - it probably is. Many individuals have begun to receive robo-calls and social media requests for social security numbers, banking information, and gift cards. Scammers promise high paying work from home opportunities, free sanitation and cleaning, as well as COVID-19 protection in exchange for payment and sensitive information.Be aware of scammers using government aid packages for criminal gain. Lawmakers have announced plans to send Americans checks to assist with the financial burden of the virus, with details still in discussion. The government will not request payment, nor will anyone reach out requesting personally sensitive health or financial information in exchange for financial support.Obtain your news from trusted sources. Be mindful of text message scams, social media polls and fraudulent email accounts sharing false information to create panic. A best practice is not to believe anything you see on social media (Twitter/Facebook, etc.). Before acting on information, review its source and check a trusted news outlet to confirm its validity.When in doubt, ask a coworker, family member, or friend for their opinion. Two sets of eyes are better than one. If you believe you have fallen victim to a scam, call your local police at their non-emergency number and consider reporting to the FBI s IC3 Internet Crime Database. Providing this type of information and guidance to residents can assist in protecting them from scams and other predatory behavior, and is especially important at senior properties, since the elderly are a prime target for these criminals.

HUD Issues Notice on Electronic Signatures

On May 26, 2020, HUD issued Notice H20-4, Electronic Signature, Transmission and Storage - Guidance for Multifamily Assisted Housing Industry Partners. This Notice provides guidance to HUD multifamily assisted housing partners on electronic signatures, electronic transmission, and electronic storage of documents and forms required by HUD Multifamily Housing Programs. With the issuance of this Notice (which is effective immediately), HUD permits, but does not require, industry partners to use electronic signatures. The Notice also permits electronic transmission and storage of files. Owners and management agents (O/As) adopting the terms of the Notice must provide applicants and tenants the option to utilize wet (i.e., original) signatures and paper documents upon request. When feasible, O/As, applicants, and tenants should have the option of providing signatures and documents in wet or paper form. The Notice does not change the nature or use of required documents and all such guidance remains the same. For example, an O/A may accept a tenant s notarized statement or signed affidavit regarding the veracity of information submitted, if the information cannot be verified by another acceptable verification method. However, the document may be submitted in paper form or signed and/or transmitted to the O/A electronically. Applicability The Notice is applicable to the following HUD programs: Project-based Section 8, includingNew Construction;HFA financed;Substantial Rehabilitation;Section 202/8;Rural Housing Section 515/8;Loan Management Set-Aside (LMSA);Property Disposition Set-Aside (PDSA); andRAD projects with Project Based Rental Assistance.Other ProgramsSection 202 SPRAC;Section 202/162 PAC;Section 202 (PRAC);Section 811 PRAC;Rent Supplement;Section 236 (including RAP); andSection 221(d)(3)/(d)(5) BMIR. The guidance does not apply to the 221(d)(4) program, the HOME program, or Public & Indian Housing Programs. The Notice pertains to all HUD forms and O/A created documents relating to asset management, Section 8 contract renewal, and occupancy policies. When implementing this Notice, O/As should ensure that all applicable laws relating to electronic transactions are followed. This includes: Electronic Signatures in Global and National Commerce Act;The Uniform Electronic Transactions Act; andGovernment Paperwork Elimination Act. O/As interested in utilizing electronic signatures and transmissions should obtain a copy of this Notice and should also download and review "Use of Electronic Signatures in Federal Organization Transactions," which provides greater discussion and detail on items discussed in the HUD Notice.

Procedures for Requesting a Private Letter Ruling

A Private Letter Ruling (PLR) is a written decision by the Internal Revenue Service (IRS) that is sent in response to a taxpayer s request for guidance on unusual circumstances or complex questions about their specific tax situation. For certain transactions involving large amounts of money, the tax law may be unclear. The purpose of the private letter ruling is to remove any uncertainty and to advise the taxpayer, usually a business, regarding the tax treatment they can expect from the IRS given the circumstances specified by their ruling. A PLR may also help a taxpayer confirm whether or not a potential action will result in a tax violation. How a PLR Works A PLR is specific and applicable only to the individual taxpayer and their tax situation at the time of the request. PLRs on behalf of other taxpayers cannot be used as precedent by a person requesting a ruling regarding their own issue, and in no way binds the IRS to take a similar position when dealing with other taxpayers. However, the IRS may redact the personal content of a PLR and issue it as a Revenue Ruling, which becomes binding on all taxpayers. Even with a favorable ruling, a taxpayer has no absolute guarantee of the tax consequences, since the IRS can modify or revoke a previously issued PLR if it is later determined that the ruling was incorrect or inconsistent with the current position of the IRS. Private letter rulings are generally made public 90 days after they are provided to the taxpayer, with all identifiable information on the taxpayer redacted. How to Request a PLR Taxpayers requesting a PLR should consult the Revenue Procedure published by the IRS at the start of each calendar year, which describes guidelines and updates for the process and includes sample request letter templates and a checklist of over 50 questions that must be answered. Taxpayers planning to request a PLR should consult with an IRS employee or another tax expert for help with the process. The filing procedure is extremely technical and exact compliance is required for a successful filing. The IRS generally will not issue "comfort letters" on matters that have already been decided by tax law, regulation, court decision, revenue ruling, revenue procedure, or notice. On April 30, 2020, the IRS released an advanced version of Revenue Procedure 2020-29 which modifies the procedures outlined in Revenue Procedure 2020-1. This revised procedure temporarily allows for the submission of requests for PLRs by electronic means. One of the burdens of requesting a PLR is the cost, which has steadily risen in recent years. Fees incurred by a taxpayer can range from $150 for simple requests to $50,000 for pre-filing agreements. For a specific transaction, costs of $30,000 are not unusual - this is in addition to the professional fees the taxpayer will incur. The IRS generally completes ruling requests within 60-90 days, although the process can take significantly longer if multiple branches of the IRS need to review the ruling or if there are other extenuating circumstances. Also, current requests may take longer due to limited IRS personnel as a result of the pandemic. All PLR requests must include the following: A complete statement of facts and other information;An analysis of material facts;A statement indicating whether the issue affects any tax returns the owner already filed;A statement indicating whether a ruling on the same or a similar matter has been issued or requested, or is pending;A list of authorities that support the request;A list of authorities that appear to run contrary to the request;A statement identifying any pending legislation that would affect the request;A statement identifying information to be deleted from the copy of the PLR the IRS will make available to the public;The owner s signature or the signature of its authorize representative;A list of authorized representatives;A power of attorney and declaration of representative from each authorized representative;A statement attesting to the accuracy of the request under penalties of perjury; andThe number of copies of the request the owner is submitting. Once the request is made to the IRS, a representative of the IRS will contact the taxpayer within 21 days after the IRS receipt of the request in order to discuss procedural issues. One important note relating to the COVID-19 pandemic, according to Revenue Procedure 2020-29 (noted above), electronic submission will result in faster processing than paper submission. After this initial contact with the IRS, taxpayers should maintain contact with the Service while the ruling is pending. This can further speed up the process.

Webinar on Fair Housing and COVID-19

A. J. Johnson will be conducting a webinar on June 2, 2020 on Complying with Fair Housing Law in the Age of COVID-19. The Webinar will be held at 10:00 AM Eastern Time. This one hour webinar will provide property managers with guidelines and recommendations for handling COVID-19 fair housing issues. A brief overview of fair housing requirements will be followed by a discussion of how COVID-19 fears may lead to fair housing violations relating to ethnic minorities and the disabled. The relationship between the pandemic and reasonable accommodation requests will be covered, as well as the particular attention that must be paid to potential sexual harassment. Finally, the importance of consistent treatment of applicants and residents will be discussed. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training."

COVID-19 Takes Disproportionate Toll on Affordable Housing Residents

A new survey by the Federal Reserve (FED) shows that 39% of former workers in households earning $40,000 or less lost work during the current pandemic, and many of these households do not have the resources to make it through to a return to work. Operators of affordable housing (HUD/LIHTC) will know immediately that this is the very income group affordable housing programs are designed to serve, and the vast majority of our residents will fall into this income category. The FED survey was released on May 14 and clearly shows that lower income households entered the COVID-19 shutdown in precarious economic positions that have only worsened since March. At the beginning of the nationwide lockdown, many Americans had limited savings, despite gains from a record-long economic expansion that was of limited benefit to many in the lower-income categories. According to the survey, at the end of 2019, 30% of adults said they could not cover three months worth of expenses with savings or borrowing if a job loss were to occur. 20% of people working in February reported losing a job or being furloughed in March or the beginning of April, and most of that job loss was highly concentrated among low earners. In fact, 39% of former workers living in a household earning $40,000 or less lost work, compared with 13% in those making more than $100,000. The U.S. economy began slowing in March as state and local governments instituted stay-at-home orders in an attempt to slow the spread of the virus. This has almost certainly caused the steepest growth decline in the United States since World War II. Consumer spending has tanked as stores and restaurants closed, and mass layoffs are now a feature of daily lives. Nearly 3 million people filed for unemployment benefits during the week of May 4, resulting in a two month total of more than 36 million. Congress has provided more than $2 trillion in relief spending, expanded unemployment insurance, and provided forgivable loans to small businesses as a way of protecting jobs. However, it is becoming apparent that these efforts will not be enough to stem the damage and there is no discernable timeframe for fully re-opening the economy. About 53% of people with jobs worked from home at the end of March, but this is a highly educated group. More than 60% of workers with a bachelor s degree worked completely from home, versus 20% of those with a high school degree or less. Among those who have lost hours or jobs due to the pandemic, 48% were "finding it difficult to get by" or "just getting by," according to the survey. Only 64% of those with reduced employment felt that they would be able to pay their bills in April, compared with 85% of those without a work disruption. Then there are those who took pay cuts - about 23% of all adults, and 70% of those who had lost their jobs or had hours reduced said their income was lower in March than in February. About 90% of workers who lost jobs expect to return to work for the same employer according to the survey, but most do not have a return date. About 5% had already returned to work, and 8% did not expect to go back to the same employer. Additional help from Congress is almost certainly going to be required but it will be a much harder climb than the earlier packages. The Phase IV CARES relief package is already running into trouble in the Senate and passage of the House bill is unlikely. In the meantime, affordable housing operators must be prepared for a reduction in rent collections and if the crisis continues through the summer, without additional help from the federal government, cash flow for some properties may become an issue. This may be especially true for Low-Income Housing Tax Credit developments, which may not have the mortgage forbearance of some HUD-assisted properties. Now is the time to examine planned expenditures for the upcoming year, and unless necessary for legal reasons or to maintain the property is a sound physical condition, consider deferral of such expenditures.

Joe Biden Releases Housing Plan

Former Vice President and presumed Democratic Presidential candidate Joe Biden has released a comprehensive housing plan - much of which deals with affordable rental housing, including the Low-Income Housing Tax Credit program. Following are the major elements of the 81-page plan that relate to affordable housing. A Homeowner & Renter Bill of Rights - this part of the plan would prevent mortgage brokers from leading borrowers into loans they cannot afford; prohibit the advancing of foreclosures when a homeowner is in the process of receiving a loan modification; and prohibit landlords from refusing to accept Housing Choice Vouchers.Tenant eviction protections, including support for the Legal Assistance to Prevent Evictions Act of 2020, which will help tenants facing eviction access legal assistance.Encourage the elimination of local and state housing regulations that perpetuate discrimination by seeking legislation requiring any state receiving Community Development Block Grant (CDBG) or Surface Transportation Block Grants to develop inclusionary zoning practices.Expand the Community Reinvestment Act (CRA) to apply to mortgage and insurance companies as well as banks and to close loopholes that allow banks to avoid lending and investing in all the communities they serve.Re-implement the Affirmatively Furthering Fair Housing Rule requiring communities to proactively examine housing patterns and identify and address policies that have a discriminatory effect.Create an advanceable and refundable tax credit of up to $15,000 to assist families with down payments to purchase their first home.Provide Section 8 vouchers to every eligible family by fully funding the Section 8 program.Enact a Renter s Tax Credit to reduce the cost of rent and utilities to 30% of income for low-income individuals and families who make too much to qualify for Section 8 but still cannot afford decent housing.Establish a $100 billion Affordable Housing Fund to construct and upgrade affordable housing. This fund would be available to states and communities that are willing to implement new zoning laws that encourage more affordable housing. This Fund, along with the potential withholding of CDBG and transportation dollars, represents the "carrot and stick" approach that is most likely to work with cities that have heretofore been uninterested in affordable housing.Expand the HOME program and the Capital Magnet Fund with an additional $5 billion annually.Increase funding for the Housing Trust Fund (HTF) by $20 billion.Increase credits for the LIIHTC program by $10 billion. This blueprint will certainly provide the framework for any Biden housing plan should he be elected President in November, so it is worth paying attention to. Clearly, some of the goals outlined in the plan would be beneficial to the affordable housing industry.