News

HUD Publishes 2020 Income Limits

On March 31, 2020, HUD published the 2020 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, 2020.  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 2019. The median has increased by 3.95% and is now $78,500. 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. 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 higher of the MTSP limits or the National Non-Metropolitan Income Limits (NNMIL). According to HUD, the non-metropolitan median income has gone up 2.8% from 2019 to 2020. Owners of LIHTC projects may rely on the 2019 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, 2020. 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

Complying with HUD's New Guidance on Assistance Animals

On February 8, 2020, I posted an article on the new HUD guidance on how to assess requests to have an animal as a reasonable accommodation under fair housing law. This new guidance which is known as the "Assistance Animal Notice" includes two attachments: (1) "Assessing a Person s Request to Have an Animal as a Reasonable Accommodation Under the Fair Housing Act," and (2) "Guidance on Documenting an Individual s Need for Assistance Animals in Housing." Over the next few weeks I will post a series of three articles that detail requirements for each of these areas. Today s article focuses on "service animals," and will be followed by articles on "support animals," and the type of animals that can generally be acceptable as "support animals." As a prelude to this series, it is worthwhile to remind readers of HUD s basic position relating to assistance animals. HUD has made it clear that such animals are not pets and cannot be subject to a community s standard "pet policies." Assistance animals do work, perform tasks, assist, and/or provide therapeutic emotional support for individuals with disabilities. Assistance animals fall into two categories: (1) Service animals [the subject of this first article], and (2) support animals, which may be trained or untrained, and do work, perform tasks, provide assistance, and/or provide therapeutic emotional support for individuals with disabilities. Any animal that does not qualify as a service or support animal is considered a "pet," and may be subjected to an owners pet policies. Fees or deposits may be charged for pets and breed restrictions may be imposed. There may be no fee or deposit for assistance animals, nor may there be automatic breed restrictions. One more general note before our discussion on service animals; a household may need more than one assistance animal. For example, a person may have a disability related need for both animals, or two disabled people in the same household each need their own assistance animal. When determining whether more than one assistance animal is needed, the basic procedures outlined in the HUD notice - and discussed in this series of articles - should be followed. Service Animals Service animals must be permitted in housing in virtually all cases. In order to determine whether an animal qualifies as a service animal, housing providers should follow the guidance issued by the Department of Justice (DOJ) under the Americans with Disabilities Act (ADA). HUD defines a service animal as "any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability, including any physical, sensory, psychiatric, intellectual, or other mental disability. Other species of animals, whether wild or domestic, trained or untrained, are not service animals for purposes of this definition." So - a "service animal" is a dog which has been trained to perform tasks relating to a disability. HUD goes on to state "the work or tasks performed by a service animal must be directly related to the individual s disability." {Note that in some circumstances, a miniature horse may be considered a service animal.} In order to determine whether an animal is a service animal, a housing provider may consider the following issues: Is the animal a dog? If "no," with the possible exception of a miniature horse, the animal is not a service animal. However, it may still be another type of assistance animal for which reasonable accommodation is needed. If the answer is "yes," the following should be considered.Is it readily apparent that the dog is trained to do work or perform tasks for the benefit of an individual with a disability? If "yes," further inquiries are unnecessary and inappropriate because the animal is a service animal. If "no," there are additional inquiries that may be made. Before discussing those additional inquiries, consideration should be given to when it is readily apparent that a dog is a trained service animal. Examples include:Guiding an individual who is blind or has low vision;Pulling a wheelchair; orProviding assistance with stability or balance to an individual with an observable mobility disability.If the need for the dog is not apparent, what questions can a housing provider ask? Per HUD, the following questions may be asked:Is the animal required because of a disability? andWhat work or task has the animal been trained to perform?If the answer to the first question is "yes," and the work or task is identified in response to the second question, the accommodation should be granted, unless it is unreasonable to so.If the answer to either question is "no" or "none," the animal does not qualify as a service animal under federal law, but it still may be a support animal that needs to be accommodated. In essence, these two questions are the only questions that may be asked in determining whether or not an animal qualifies as a service animal, and if the person adequately answers these two questions, no further documentation may be required and the request must - unless unreasonable - be granted. It is important to remember that in the case of a service animal, the disability does not have to be obvious; if the person says they are disabled and describes what the dog has been trained to do, you must grant the request. However, if the animal does not qualify as a "service" animal, additional steps may be taken. Part II in this series of articles will discuss assistance animals other than service animals.

CARES Act - Impact on Multifamily Housing Operators

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act (Senate Amendment to H.R. 748. This $2 trillion bill provides financial aid to individuals, businesses, nonprofits, and state and local governments. It does not contain significant provisions relating to community development or affordable housing, but members of Congress have indicated that a fourth COVID-19 relief package may do so. The CARES Act does have some provisions that may impact some multifamily operators. A brief description of those follows. 2301. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS SUBJECT TO CLOSURE DUE TO COVID-19: This section applies only to employers that are forced to close or suspend operations due to orders from a governmental authority. This provision will not have substantial impact on the multifamily housing community. 2302. DELAY OF PAYMENT OF EMPLOYER PAYROLL TAXES: Employers may defer payment of payroll taxes. Beginning on the date of the Act, March 27, 2020, 50% of payroll tax will be due on December 31, 2021 and the remaining 50% shall be due on December 31, 2022. All employers should discuss this with their accountants to determine specific applicability. 4023. FORBEARANCE OF RESIDENTIAL MORTGAGE LOAN PAYMENTS FOR MULTIFAMILY PROPERTIES WITH FEDERALLY BACKED LOANS: This provision applies to borrowers with multifamily properties with a federally backed mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency. A multifamily borrower with a federally backed multifamily mortgage loan that was current on its payments as of February 1, 2020, may submit an oral or written request for forbearance to the borrower s servicer affirming that the multifamily borrower is experiencing a financial hardship during the COVID-19 emergency.Once the request is received, the servicer shallDocument the financial hardship;Provide the forbearance for up to 30 days; andExtend the forbearance for up to two additional 30-day periods upon the request of the borrower provided that, the borrower s request for an extension is made during the covered period, and, at least 15 days prior to the end of the current forbearance period.The borrower has the right to discontinue the forbearance at any time.RENTER PROTECTIONS DURING FORBEARANCE PERIOD: if a borrower receives a forbearance, the borrower may not, for the duration of the forbearance -Evict or initiate the eviction of a tenant from a dwelling unit located in or on the applicable property solely for nonpayment of rent or other fees or charges; orCharge any late fees, penalties, or other charges to a tenant for late payment of rent.A borrower that receives a forbearance under this section (1) may not require a tenant to vacate a dwelling unit on the property before the date that is 30 days after the date on which the borrower provides the tenant with a notice to vacate; and (2) may not issue a notice to vacate until after the expiration of the forbearance.Properties affected by this are those with either direct federal loans or mortgage insurance.This provision will end on the sooner of (1) the termination date of the COVID-19 national emergency; or (2) December 31, 2020.This provision does not apply to LIHTC properties unless they have a federally backed loan. As noted above, future legislation relating to COVID-19 is likely to have a more significant impact on the affordable housing industry, but such legislation is unlikely before late April or May.

A. J. Johnson Consulting Operations During COVID- 19 Crisis

Aside from the onsite training sessions we conduct on a regular basis, the current COVID-19 health crisis is not impacting the operations of our company. All of our staff work remotely and we are fully operational with regard to all client services, including file reviews and consulting services. We are fortunate in that we have not had to make any changes in how we operate relative to our clients. Nothing is more important to us than the safety of our staff and customers. For that reason, we have waived any fees or costs for those customers who cancel or postpone onsite training. Training can be taken later; we need to do all we can to ensure the health of each of us now. In short, if you are a client of A. J. Johnson Consulting Services, Inc., you will see no change in the services offered. As always, we are available to provide whatever service we can on your behalf. Thank you for being a valued customer of A. J. Johnson Consulting. On behalf of our employees, we send our best wishes for your health and well-being as we push through this unprecedented challenge together.

Dealing with Coronavirus (COVID-19) at Multifamily Properties

At this time, all but one state (West Virginia) has reported cases of coronavirus, more accurately known as "corona virus disease 2019," or COVID-19. Areas with dense populations are particularly susceptible to an outbreak due to the proximity of individuals to one another. Property s with emergency response plans should follow those plans if they contain sections on outbreaks due to contagion. Those without an emergency plan will need to develop policies on the fly. The World Health Organization (WHO) estimates COVID-19 s mortality rate worldwide at 3.4%. By comparison, seasonal flu kills less than one percent of those infected. The American Medical Association estimates that each infected person will infect an additional two to three people, an exponential rate of increase. And, the disease can apparently be spread by people who are not yet exhibiting symptoms. This makes it much more difficult to contain the disease. This crisis is presenting a unique challenge for operators of multifamily housing since such operations require constant, around the clock attention. Following are some of the steps public health officials recommended for operators of multifamily housing. Expect and allow for staff absences. This may occur due to illness of the staff or their family, or the need for a staff member to stay home to care for a child whose school has been closed. To prepare for this,Cross train employees to perform multiple job functions;If possible, allow for telecommuting, and flexible or staggered work hours;Establish protocols for staff to stay in touch with supervisors.Encourage sick employees to stay home. An employee with a fever should stay home until they are free of fever (100.4 degrees or greater using an oral thermometer), signs of a fever, and any other symptoms for at least 24 hours, without the use of fever-reducing or other symptom altering medicines such as cough suppressants.Do not require a doctor s note in order for an employee to stay home or return to work since doctor s offices are going to be overwhelmed and may not have the time to provide the notes.Separate sick employees. If a staff member has a cough or shortness of breath when arriving at work, or develops these symptoms while at work, they should be separated from other employees and sent home immediately.Generally speaking, the CDC reports that early stage COVID-19 symptoms appear to share similarities with the common cold, and range from mild to severe, including (1) fever, (2) cough, (3) shortness of breath, (4) muscular pain, and (5) tiredness.Communicate policies to your staff. Let them know that they should under no circumstance come to work if they show symptoms of the flu and discuss respiratory etiquette and hand hygiene at work. Additional resources are available at www.cdc.gov/coronavirus/2019-ncov/communication/factsheets.html.Provide tissues and no-touch disposal receptacles for employees to use.Instruct employees to clean their hands often with an alcohol based hand sanitizer that contains at least 60 to 95% alcohol or wash their hands with soap and water for at least 20 seconds.If a staff member is well but has a sick family member at home, CDC guidance on conducting a risk assessment should be followed.If an employee is confirmed to have COVID-19, employers should inform fellow employees that they may have been exposed but maintain confidentiality as required by law.If you operate a federally assisted property (e.g., HUD or RD) and recertifications are required, HUD has indicated that extension requests for an active case of COVID-19 or where a resident has been advised to quarantine may be granted. Management should verify the reasons for the extension request, which may include any resident provided written information from their doctor or other health professional. While apartment buildings are communal in nature, the characteristics of apartment buildings probably will not increase COVID-19 transmission rates. According to the CDC, the virus is thought to spread mainly from person-to-person between people who are in close contact with one another (within about six feet) through respiratory droplets produced when an infected person coughs or sneezes. The particles do not remain suspended in air, so close contact is required for transmission. For this reason, the mere presence of sick individuals at the site should not pose a direct threat to staff or other residents. The virus also is not transmitted through HVAC systems, so HVAC systems should not be disabled or altered. Frequent and thorough cleaning is an important preventive measure. Viruses can be spread through "fomites," which are inanimate objects such as tissues, money, door handles, and office supplies. Such transfer can be minimized by frequent hand washing, cough etiquette, and other personal hygiene efforts. Staff should frequently clean common areas and frequently touched items like elevator button, door handles, and intercom panels. According to the CDC, regular household cleaners and EPA-registered disinfectants will work on these surfaces. All owners and managers of multifamily housing should update their emergency procedures to include this new guidance and be prepared to implement the recommendations on a very short notice.

Understanding the Role of a Notary

In the affordable housing industry, verification of income and other eligibility elements is a common requirement. In most cases, third party verification is required, meaning that the provider of the income provides a verification of the income. While such verifications are usually clear cut (e.g., pay stubs for employment purposes), there are times when we must rely on verification from a source with which we may not be familiar, such as an ex-spouse, a parent, a friend, etc.). In these cases, in addition to verifying the income, managers are also required to verify the identity of the person providing the verification. This is usually done through the use of a "Notary Public," or Notary. There are managers who think that when a Notary notarizes a document, the Notary is attesting to the truthfulness of the statements on the document; this is not the case. This article will outline basic notarial duties and will assist affordable housing managers in an understanding of exactly what notaries do (and don t do). What is a Notary Public? A Notary Public is an official of integrity appointed by state government - typically by the Secretary of State - to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents. These official acts are called notarizations, or notarial acts. Notaries are publicly commissioned as "ministerial" officials, meaning that they are expected to follow written rules without the exercise of significant personal discretion, as would otherwise be the case with a "judicial" official, such as a judge. What does a Notary Do? A Notary s duty is to screen the signers of important documents for their true identity, their willingness to sign without duress or intimidation, and their awareness of the contents of the document or transaction. Some notarizations also require the Notary to put the signer under an oath, declaring under penalty of perjury that the information contained in a document is true and correct. Property deeds, wills and power of attorney are examples of documents that commonly require a Notary. In the context of affordable housing, commonly notarized documents include recurring gift letters and child support verifications. Impartiality is the foundation of a Notary s public trust. They are duty-bound not to act in situations where they have a personal interest. For this reason, it is recommended that property managers who are Notaries never notarize income verifications or other eligibility related documents for the property they manage. Why are Notaries and Notarizations Necessary? Through the process of notarization, Notaries deter fraud and establish that the signer knows what document they are signing, and that they are signing willingly. How Does a Notary Identify a Signer? Generally, a Notary will ask to see a current ID that has a photo, physical description and signature. Acceptable IDs usually include a driver s license or passport, but could also include a U.S. Military ID, State, county and local government IDs, permanent resident cards issued by the U.S. Citizenship and Immigration Services, and driver s licenses issued in Mexico or Canada. What a Notary is Not Unlike Notaries in foreign countries, a U.S. Notary Public is not an attorney, judge, or high-ranking official. Notaries cannot provide legal advice or make a legal pronouncement. Basic Notarial Duties All states allow Notaries to perform oaths/affirmations and acknowledgments,  but other duties vary by state. Acknowledgment: Some document transactions require that the signer make a formal declaration before a Notary, thereby "acknowledging" execution (signing) of the document. In these cases, the signer verbally acknowledges that:The signer understands the contents and purposes of the document;The signature is his/her own; andThe document was signed willingly (no coercion). Documents typically requiring an acknowledgement are contracts, deeds, agreements, powers of attorney, etc. These documents contain terms to which the signer is agreeing. Documents requiring acknowledgement can be signed earlier than or at the time of notarization. Either way, the signature must clearly be an original one, stroked directly onto the paper with "wet" ink (ballpoint, rollerball, etc.). The reason the document signature does not have to be witnessed by the Notary is that the person is acknowledging under oath that they signed the document. Oath or Affirmation: Other document transactions require that the signer swear an oath or affirm to a Notary, under penalty of perjury, that the contents of a document are true. Oaths and affirmations differ but have the same legal effect. When taking an "oath," a person swears a pledge and invokes a Supreme Being (e.g., God). Persons who do not wish to invoke a Supreme Being may make an affirmation.Documents typically requiring an oath include written affidavits and applications - documents for which the signer/affiant has supplied a set of facts (e.g., how much money the give a household each month).Documents requiring an oath or affirmation must be signed in the presence of a Notary. This is the type of notarization that generally should be required for verifying documents at an affordable housing complex. If a document presented for an oath/affirmation has already been signed, the Notary must require the signer to sign the document again - in the Notary s presence.Signature Witnessing: Sometimes a Notary is asked simply to witness an individual s signature. This requires neither an acknowledgement nor an oath/affirmation. There is no verbal ceremony for this notarial act, and the signer is not taking an oath that the information on the document is true. Not all states allow Notaries to simply "witness" signatures. For example, Georgia and Kansas prohibit Notaries from also acting as document witnesses, but Colorado, Delaware, and Pennsylvania permit it. It is the responsibility of a Notary to understand what is permitted under their state law. While it is certainly not necessary for affordable housing managers to fully understand the laws relating to Notaries, managers do need to understand what a Notary does. Whether to require an oath/affirmation or just the witnessing of a signature will depend on circumstances. If we are only seeking to ensure that the person signing a document is legitimate, witnessing of the signature is adequate. But, if the veracity of a statement is important, a document should be notarized with an oath or affirmation.

Landlord Agrees to Abandon Two-Person Per Bedroom Occupancy Policy in Conciliation Agreement

In the case of Inland Fair Housing & Mediation Board (IFHMB) v. Edwin A. Muradliyan Living Trust, Pacific Diversified No. 4 LLC, Cheri Todaro, Deanna Cordova, the respondent Landlord agreed to abandon a two-person per bedroom occupancy policy as part of a Conciliation Agreement with IFHMB, a fair housing testing organization. The complaint was filed with HUD on May 21, 2019, alleging that the Landlord (1) refused to rent to families with children, (2) cited different terms and conditions to families with children, and (3) implemented and enforced an unreasonably restrictive occupancy policy. The terms of the Conciliation Agreement require the owner to pay IFHMB $10,000, ensure that all staff members who have contact with tenants attend approved fair housing training, and abandon a two-person per bedroom occupancy policy. This agreement reiterates the fact that HUD is no longer willing to simply accept an occupancy policy of two people per bedroom as a "safe-harbor" for fair housing purposes. Owners and management companies should examine their current occupancy policies to ensure that the policy is not overly restrictive with regard to providing housing for families with children. My recommendation is to follow any local occupancy ordinances with regard to occupancy standards. In the absence of local ordinances (or if the ordinance is clearly unreasonable in the number of people allowed in a unit), I recommend the "2+1" standard. This is two people per bedroom plus one. Using this standard, an owner would permit five people to occupy a two-bedroom unit, seven people in a three-bedroom unit, etc.

NSPIRE - HUD Replacement for REAC Protocol is Moving Forward

The Department of Housing & Urban Development (HUD) is well underway in the overhaul of its Real Estate Assessment Center (REAC) physical inspection protocol. The REAC inspection process will eventually be replaced with a new physical inspection procedure known as the National Standards for the Physical Inspection of Real Estate (NSPIRE), which will feature new standards, protocols, and procedures that will apply to many HUD programs, including public housing, multifamily housing, and FHA-insured housing. HUD is well into a two-year demonstration program to test and refine the NSPIRE protocols before finalizing them. Major changes to be tested include: Requiring site owners and management agents to perform comprehensive annual self-inspections covering all units;Putting greater emphasis on health and safety issues than on function and appearance; andA new scoring model that places most emphasis inside resident units as opposed to common areas. HUD has decided to incorporate two new procedures into the NSPIRE demonstration: HUD will test for the best method for including up to five additional dwelling units in the inspections, as identified in advance by resident organizations. If there is no resident organization, HUD will use a risk model to select units above those units selected by sample; andHUD is researching the best way to survey residents and include survey results in the NSPIRE demonstration. Under these new procedures, any safety or health issue will be considered Urgent. Function and operability will fall under the heading of Planned  and can be undertaken through routine work orders. A third category, relating to condition and appearance, will be considered Subjective, and there will be a good deal of discretion in this area. The demonstration phase is voluntary and will include 4,500 participating properties. This phase will go through October 2020. Two of the main goals of the program are to streamline the inspection process and refocus the standards on areas that directly affect residents. For this reason, NSPIRE reduces the current five inspectable areas (dwelling units/building systems/common areas/building exterior/site) to three inspectable areas (dwelling units/inside/outside). The scoring weight given the dwelling units is increased from 35% to 50% of the overall score, meaning that a property cannot pass if the dwelling unit section fails. The "inside" and "outside" inspectable areas will each be worth 25% of the total score. Another major change to the procedures has already occurred, and that is the inspection notice timeframe. Prior notifications were sometimes as much as 120 days prior to an inspection with the norm being 60 to 90 days. The new requirement is no more than 14 days and there is a reduced ability to reschedule. HUD implemented this change to encourage year-round maintenance as opposed to "reactive" maintenance once an inspection was scheduled. Management companies will now have to develop in-house procedures to prepare for these new requirements. Clearly, the most significant change is the scoring emphasis for the condition of the units, which is the area over which management has the least control. It will be virtually impossible to address all issues in resident units in a 14-day time period, meaning that management will need regular access to units. HUD is currently seeking properties to participate in the demonstration. These properties can be owned by Public Housing Agencies (PHAs) or private owners. Owners may register one or more properties for acceptance into the demonstration but there is no requirement to submit all properties within a portfolio. Also, submission of an application does not guarantee acceptance into the program, nor does it obligate the owner in any way. If accepted, an owner may voluntarily withdraw any and all properties at any time. Owners interested in participating may complete an online application (as noted below). To encourage participation, HUD has outlined a number of benefits: Only one inspection, and scores are advisory;Owners will be able to participate in focus groups, listening sessions, conference calls, and training sessions on policies and procedures;Owners will have a direct line to HUD for purposes of providing feedback; andOwners will receive advance training on how to use the inspection software. Eligibility Requirements Annually inspect 100% of units. Self-inspections will be submitted electronically for evaluation but will not be scored;Schedule a mutually agreed inspection date with a HUD inspector, so demonstration data can be collected;If property conditions warrant, HUD reserves the right to order and execute a UPCS inspection and apply any available remedies, sanctions, or other actions as determined by the results;If the project is currently subject to an existing HUD Compliance, Disposition, and Enforcement or Corrective Action Plan, the property is not eligible;If the most recent REAC score was 70 or less, and the property is not currently subject to corrective action, the project may be considered for inclusion on a case-by-case basis; andOwners must agree to participate in focus groups, listening sessions, conference calls and training sessions. Any owner interested in joining the demonstration program may complete an online application at hud/gov/program_offices/public_indian_housing/reac/nspire/registration. The form may then be emailed to nspire@HUD.gov.