News

Court Rules that Owner Can Evict Resident for Marijuana-Related Lease Violations in State That Permits Medical Marijuana Use

            In Sherwood Associates, LP v. Jackson, January 2019, the Maine Supreme Court ruled that an owner could evict a resident for marijuana use that violated the terms of the lease - even though the use of medically prescribed marijuana is legal in Maine. Facts of the Case In December 2016, the owner issued the resident (Jackson) an eviction notice stating that his use and possession of marijuana violated the terms of the lease that prohibited unlawful activity in the unit because "medical marijuana is illegal under federal law even if it is permitted under state law."The resident submitted a request to the owner for a reasonable accommodation to use marijuana for medical purposes in accordance with the Maine Human Rights Act.The eviction was delayed while the owner reviewed the request.In April 2017, the owner denied the request, stating "Under federal law marijuana is a controlled substance and possession or manufacture of marijuana is a violation of federal law. Fairfield Family Housing is an affordable housing complex that receives federal funds and is subject to oversight and frequent audits by the federal government. In the Landlord s view, a request for accommodation that results in a violation of federal law is per se unreasonable and exposes the Landlord to potential liability and/or noncompliance with federal regulations."The owner issued a 30-day notice that it was terminating the resident s lease since the unit had been used for unlawful purposes and activities. The notice stated that the resident had also refused access to the bedroom that was used as a marijuana grow room; installed a lock on the bedroom without permission; threatened physical harm to staff seeking to inspect the bedroom; smoked marijuana in his unit in violation of a no-smoking policy; and grew and possessed marijuana in violation of a zero-tolerance drug policy. Finding The lower court granted possession of the unit to the landlord - the resident appealed.The Maine Supreme Court ruled for the owner and affirmed the lower court s decision Reasoning The Court found that the resident violated the lease in three ways that were independent of the marijuana use: (1) He denied access to the unit in violation of the lease; (2) he installed a lock on the bedroom (grow room) in violation of the lease; and (3) he intimidated and threatened staff in violation of the lease. While this case does indicate that owners in states that allow the use of medically prescribed marijuana may be able to deny a reasonable accommodation request for the use of marijuana and prevail in state court, key elements in the court decision had nothing to do with the actual use of the marijuana. Other lease violations appear to have played a key role in the court s final decision. Based on this, it is recommended that prior to rejecting requests for reasonable accommodations relative to the use of marijuana in states that permit it, owners consult with local counsel who are familiar with the state law and how it may be interpreted in court vis a vis the federal drug laws. This remains an evolving area of law and care should be taken when refusing reasonable accommodation requests in this area.

Rules for Electronic Waiting Lists at HUD Projects

In most cases, HUD projects are required to maintain waiting lists. A waiting list is a formal record of applicants for housing that identifies the applicant s name, date and time of application, selection preferences claimed, income category, and the need for an accessible unit. The waiting list may be kept in either a bound journal or a computer program. While many of the HUD waiting list rules apply to both the manual and electronic waiting lists, some are unique to the electronic lists. Setting Up the List             There are two main issues to consider when establishing an electronic waiting list: 1) How to maintain the list - you can use a spreadsheet or specially designed software. If special software is used, there are some highly recommended features:             (a) Tracking History: all changes made to the waiting list must be tracked; (b) Handbook Rules Should be Built into the System: this alerts the user when a change is being made to the list that violates HUD rules. (c) List Filtering: allows the list to be sorted by various categories including unit size, applicant age, and income categories;             (d) Integration: allows applicant information to be keyed into the system only once;             (e) Reports: e.g., comparing information like precertified applicants and yearly turnovers;             (f) Usability; and             (g) User Control: limits password access to selected staff users. 2) How to Convert a Manual to an Electronic Waiting List - ensure that no applicant names are lost or misspelled, and the list s order is not changed. Once the manual list is transcribed to the electronic list, the manual list should be retained for at least 36-months. Meeting HUD Requirements - Primary HUD Rules: 1) Include required information - Name of head of household;Date and time application was submitted;Applicant s preference status;Applicant s annual income level for income targeting purposes (e.g., ELI, VLI, or LI);Whether the applicant needs an accessible unit, including the need for accessible features; Unit size needed. Note - the applicant s race/ethnicity, gender, or family size should not be included on the waiting list. It is recommended that the applicant phone number, address (regular and email), and dates of contact also be on the list. 2) Explain all changes - this includes why applicants were selected, withdrawn, rejected, or had family status changed. Any list should include a comment section. 3) Document all Changes - the following three methods for documenting changes should be used: Use a "data backup function" that records the time and date that changes are made to the list;Print a record of the list at least monthly to show each applicant s place on and selection from the list. A copy should be made each time an applicant is added to or selected from the list. The copy should include the time and date of the printing. Keep a copy in the applicant file and central waiting list file. If there has been no change to the list, keep a copy in the waiting list file.Re-sort and print the list after making changes in an applicant s status, such as changes in family composition and unit size Both before and after an applicant is removed from the list, the list should be printed and preserved. If the list is printed monthly to document the changes, you should also file a copy of the monthly rejection letters with the printouts. 4) Implement Safeguards - the following safeguards are not required, but are recommended: Limit password access to only staff members who maintain the waiting list;The system should track the time and date each change is made to the list and should identify the staff member who made the change;Store hard copies in a secure location;Back-up the list every time it is modified;Store back-ups both on and offsite; andTake steps to avoid staff manipulation.Print out the list periodically and compare it to the previous print-out to detect any inappropriate changes. This should be done at least every few months.

Fair Housing Testing - Understanding How it Works

            Fair housing testing was first approved by the Supreme Court in 1982. The purpose of fair housing testing is to determine the likelihood that illegal housing discrimination is occurring. How Does Testing Work?             The testing process often begins when an individual with a protected characteristic (e.g., race or national origin) files a complaint with a private fair housing advocacy organization that he or she has been treated unfairly when attempting to rent an apartment. The characteristics that are most commonly the subject of testing are race, disability, familial status, and national origin. The Importance of the "Comparable Category" Element in Fair Housing Testing             In order to determine if discrimination played a part in an applicant s rejection or in the treatment the individual received, the advocacy group, many of which are funded by HUD, will send a "comparable" person to inquire about renting a unit at the same complex.             Being "comparable" means that the fair housing testers are, to the extent possible, matched with the complainant on their background, employment, rental and even educational characteristics, differing only in the characteristics that may have been the basis for the discrimination (e.g., race). To accomplish this, fair housing testers may have to lie about these characteristics on the rental application and during in-person meetings with agents. Almost 40 years ago the U.S. Supreme Court justified lying in this context as a powerful means of uncovering housing discrimination. This is a classic example of a court sanctioned "end justifying the means."             By using standardized forms that report what transpired during a test, such as the nature of the assistance given, the number, type and location of units shown, the terms and conditions offered, etc., federal and state investigative and enforcement agencies, such as HUD and the Department of Justice (DOJ), can make a determination as to whether or not discrimination occurred. The "No-Comparable" Category             By isolating a particular characteristic as the only "non-comparable" category, a test may provide persuasive evidence that the reason a tester was offered a unit that the person with the protected characteristic was denied, or given better treatment during the application process, was due to the particular characteristic of the complainant.             Testing for disability discrimination has become especially common and often is not complaint-driven. Instead, private fair housing organizations may send testers to apartment communities to assess their compliance with federal and state design and construction requirements before anyone has actually filed a complaint about the design features of a particular complex. How Fair Housing Testing Evidence is Used             For complainants (the testing organization) an important question has always been how much information HUD will require before proceeding with the investigation of a complaint. For respondents (the accused) an important question is how and when they can get copies of the testing reports and any other information related to the tests and the testers themselves.             Because of confidentiality issues regarding the identity of fair housing testers - HUD recognized that if a tester s name became public, his or her ability to participate in future tests would be jeopardized - HUD will keep the identity of individual fair housing testers secret unless and until a case proceeds to litigation. As a result, any information that could assist in identifying a tester will not be given to respondents prior to litigation. Testers will be interviewed by HUD investigators, but the testers will be considered anonymous witnesses." HUD Requirements             When a testing organization files a complaint, HUD will request - at a minimum - the following information: (1) date(s) of test; (2) time(s) of test; (3) name of site tested; (4) address of site tested; (5) name of agent(s) contacted; (6) tester(s) characteristics (e.g., protected class); (7) a description of what transpired during the test; and (8) information regarding whether the Respondent is covered by the Act.             Once a case clears the initial stage the complainant will be asked to provide HUD with: (1) tester profiles; (2) test reports; (3) test coordinator logs; (4) debriefing forms; (5) test narratives; (6) any materials a tester received from the tested housing providers; (7) testing methodology; and (8) other documents related to the tests. All of this material, with the exception of the organization s "testing methodology," will be kept in the evidentiary section of the investigative file and will be available to respondents once the case is closed. Information about the testing methodology itself, such as site and respondent selection criteria, choice of type of test(s) to be conducted, tester training materials, and tester procedures, are to be placed in the deliberative section of the file, and thus not subject to disclosure - at least while the case is with HUD.             One of the most favorable (from the respondent s standpoint) change in recent years is that testing organizations are no longer able to "hide" tests that turn out to be favorable to a respondent. HUD is now on record that organizations will be required to produce material pertaining to all other tests that relate to the complaint, regardless of the results of those tests. What Can Respondents Get and When Can They Get It?             Upon completion of the investigation, HUD must give a copy of its Final Investigative Report and any other factual information on the file to a complainant and respondent who request it. So, if you are required to answer to a complaint, when the investigation ends, always request a copy of the Final Investigative Report from HUD. It is highly unlikely that HUD will release any information relating to an organization s testing methodology. Nor will HUD release any other material it deems a "trade secret" or confidential commerce or financial information. This is due to the requirements of the Freedom of Information Act (FOIA) and HUD s own Fair Housing Initiatives Program, both of which allow non-disclosure of such information.             Information from the files of "open" cases - meaning those that have not been conciliated, withdrawn, dismissed or "no caused" - will not be released, except to the party who submitted it. The FOIA exempts from public disclosure information pertaining to "law enforcement activities," such as open administrative investigations.             Ultimately, testing by "pretend" apartment-seekers in order to produce evidence of discrimination will continue to be an important tool for government agencies seeking to root out discrimination in all its forms.             Owners of multifamily properties may avoid testing problems by remembering the basic rules relating to ensuring fair housing compliance at your property: (1) Advertise the property and not the type of people you want to live there; (2) do not discuss your residents with anyone - including other residents; and (3) make every housing decision relating to an individual based on four criteria: Is the person eligible for your property;Will they pay the rent;Will they take care of the property; andWill they be respectful of their neighbors? If the answer to each of these four questions is "yes," the housing services should be provided - no other factors should come into play.

Independent Landlords Suffered Under the Shutdown

IThe National Association of Independent Landlords (NAIL) has published a report showing that landlords who worked with government employees who were unable to pay their rent during the recent government shutdown have placed their own credit ratings at risk. Without rent payments, thousands of landlords have been unable to cover mortgages, repairs, utility bills, insurance, and in some cases, their own living expenses. Many landlords are small operators who own one or two properties and have mortgages that have to be paid every month. Housing represents the largest expense for most families. The 800,000 furloughed federal workers owed $189 million in rent and $249 million in mortgages during the month they were not able to work. Landlords who missed mortgage payments during the shutdown generally do not face foreclosure since banks usually allow up to four missed payments before a loan goes into default. However, even one late payment can impact a credit rating for up to seven years. In addition, although laid off workers who were unable to pay rent were unlikely to be evicted, their credit could also suffer if they didn t keep landlords informed of their financial situations and set up payment plans. Like so many others who were hurt during the pointless shutdown, small landlords took losses that will take some time to recover from. Hopefully, there will not be a repeat of this shameful episode in the future.

Opportunity Zones - How Tax Breaks for the Wealthy May Benefit the Less Well-Off

         "Doing well while doing good" has long been a mantra of the wealthy looking for ways to preserve their wealth while doing something worthwhile for the less fortunate. The newest investment opportunity giving them a chance to do so is the "Opportunity Zone" program, or "OZs."          OZs were created as part of the 2017 tax cut package with the intention of directing money to poor areas by offering potentially very large tax breaks to the rich. It has attracted hedge funds, investment banks and money managers who are in the process of raising billions of dollars to get in on the opportunity. Some of America s richest families and biggest investors are setting up opportunity funds.          Since January 2018, more than 80 funds have been created. Managers of these funds are trying to raise huge amounts of money by selling investors on a combination of massive returns an altruism.          While optimism is high, so is skepticism. The Congressional supporters of the program, including its primary sponsor, Senator Tim Scott, Republican of South Carolina, believe the money will help distressed towns and neighborhoods that have been left out of the recent economic expansion. However, skeptics worry that the funds will mostly target real estate and other projects that would probably attract investment without the tax break, and that the returns being promised may not be realized. The essence of the program is that it reduces capital gains taxes - potentially substantially - for investors who finance projects in about 8,200 OZs in the 50 states, DC and Puerto Rico.          Another concerning issue is that while the IRS has released some preliminary guidance, there are a lot of questions remaining. It is still not clear as to exactly what type of projects will qualify or what information fund managers must provide to investors and the government.          To date, most funds have focused on real estate development investments. Many of the Wall Street funds are investing in major metropolitan areas on the coasts, especially New York City. Critics of the program claim that these are areas that already receive substantial investment and would do so without OZs.          There is one category of investor that is targeting their activities in secondary markets such as the southeast and Midwest; these are the "impact investors." Several of these investors are working with social activists in establishing accountability standards for the funds since the federal government has not yet done so. These standards will address issues like the quality of jobs created in poor areas. The goal for impact investors is to steer opportunity funds to small businesses and other development that communities actually need, and not just to finance development that provide wealthy investors with high returns - like high-end hotels and condos. When it comes to housing in OZs, the impact investors will look to the Low-Income Housing Tax Credit (LIHTC) as a primary source rather than the more high-end gentrification housing developments. Efforts are now underway by this category of investor to develop a set of principles for the OZ program.          The first segment of the investor market to lay out some guiding principles will shape the market and determine its future direction - i.e., will OZ be just another vehicle for wealthy investors to expand their fortunes - or will it be a legitimate program for enhancing the futures of needy areas?          It is too early to know which way the program will go. Wall Street is intrigued by the OZ concept and it is being embraced by some big technology investors seeking ways to capitalize on stock market gains while avoiding large tax bills.          The law permits an investor to roll over capital gains - e.g., proceeds from the sale of stocks or real estate - into an OZ fund. The fund then invests in a qualified OZ with investments in projects such as condos or affordable housing. If the investor leaves the money in the fund for at least ten years, they may exclude 15 percent of the original capital gain from federal taxation. And - even more attractive - the investor will owe no tax on any gains that accrue as the result of an increase in value of the investment.          The largest opportunity fund so far is a $5 billion fund by CIM Group, a large real estate investment firm and property manager. According to the National Council for State Housing Finance Agencies (NCHFA), not including the CIM Fund, money managers and non-profits have raised or are seeking $18 billion for OZ funds.          In early February 2019, the real estate company Cushman & Wakefield began seeking investors for two apartment complexes planned for OZs in Puerto Rico. The company is projecting a Rate of Return of 29-37% over five years and reportedly has received interest from over 100 investors.          While coastal investments are getting the most interest, some investors are looking inland. McNally Capital, a Chicago investment firm, is considering financing housing developments in the south and Midwest.          The OZ program is also attracting non-philanthropic investors whose only goal is a substantial profit. Skybridge Capital an example of this type of investor. This is the investment firm of Anthony Scaramucci (famous as the shortest serving Presidential Communications Director in history). This firm is looking for $3 billion in investments and the initial marketing document advertises the prospect of "meaningful social benefits" from investment in Opportunity Zones, including job creation and reduced poverty. It also shows how a "hypothetical" investor could earn a ten-year return that is triple what could be expected from a non-OZ fund.          The Opportunity Zone program is in its infancy and the jury is still out on how successful it will be in terms of meeting its goal of assisting communities in need to share in the growing economy. Whether the program contributes to the long-term well-being of these communities or becomes another tax-payer funded program for the super-rich will depend to a great extent on how quickly the impact investors can take the lead in establishing the character and direction of the program.

HUD Reduces Time for Advance Notice of REAC Inspections

On February 20, 2019, HUD announced in a press release a new Notice that reduces to 14 calendar days (from 120-days) the advance notification inspectors will give before conducting physical inspections of public housing and private HUD-assisted multifamily housing. The intent is to reduce the lead time owners and PHAs have to make cosmetic repairs in order to secure a passing score on a REAC inspection. The Notice - PIH-2019-02/H-2019-04 - applies to all properties subject to REAC inspections. If an owner refuses to accept an inspection on the date contained within the notification, HUD will take the following steps: 1. If an owner/agent (O/A) declines to accept an inspection at the time initially scheduled by an inspector, the property will receive a REAC score of zero. A second attempt to schedule an inspection is possible. 2. If an O/A cancels or refuses entry for an inspection scheduled during the initial notification by an inspector, the property will receive a REAC score of zero. A second attempt to schedule an inspection is possible. 3. If a second attempt results in a completed inspection within seven calendar days of the initially scheduled date, the resulting score will be recorded. 4. If the second attempt does not result in a completed inspection within seven calendar days of the initially scheduled date due to the fault of the O/A, the property will receive a REAC score of zero, and the O/A may be subject to penalties established in statute, regulation, and other sub-regulatory documents. Based on this Notice, starting in the third week in March 2019, HUD employees and REAC inspectors will only give affordable property owners 14 calendar days of notice prior to their inspection. This significant policy change is a reminder that owners should perform regular maintenance on their properties and do repairs on a year-round basis.

IRS Final Regulation on LIHTC Compliance Monitoring

On Tuesday, February 26, 2019, the IRS will publish in the Federal Register a final regulation on how state Housing Finance Agencies (HFAs) must monitor low-income housing tax credit (LIHTC) properties for compliance with the requirements of Section 42 of the Internal Revenue Code.             This final regulation amends the compliance monitoring regulations concerning the LIHTC program, and revise and clarify the requirement to conduct physical inspections and review low-income certifications and other documentation. This final regulation replaces the temporary regulation that was issued on February 25, 2016 and amends 26 CFR part 1 to finalize rules relating to IRC Section 42.             Under the temporary regulation and Revenue Procedure 2016-15, it was determined that the HUD Real Estate Assessment Center (REAC) protocol satisfies the Section 42 physical inspection requirements. The Revenue Procedure provides that, in a LIHTC project, the minimum number of low-income units that must undergo physical inspection is the lesser of 20 percent of the low-income units in the project, rounded up to the nearest whole number of units, or the number of low-income units set forth in the Low-Income Housing Credit Minimum Unit Sample Size Reference Chart in the revenue procedure (the requirements will be outlined in this article). This same requirement applies to the number of files that have to be reviewed.             Revenue Procedure 2016-15 also provided an exception to the requirement that at least one unit in each building be inspected. Under the procedure, the all-buildings requirement does not apply to an agency that uses the REAC protocol to satisfy the physical inspection requirement.             Finally, the temporary regulations decoupled the physical inspection and low-income certification review and ended the same units requirement. An HFA is no longer required to conduct a physical inspection and file review of the same unit. In addition, an Agency may choose a different number of units for physical inspection and for file review provided the Agency chooses at least the minimum number of low-income units. Further, an Agency may choose to conduct a physical inspection and file review at different times.             This final regulation makes a number of important changes from the Temporary Regulation and Revenue Procedure and will significantly alter how HFAs monitor LIHTC properties for compliance. Provisions of the Final Regulation 1. The final regulations remove the rule that allows minimum sample size to be the lesser of 20-percent of the total number of low-income units or the minimum unit sample size set forth in the Low-Income Housing Credit Minimum Unit Sample Size Reference Chart. The final requirement is that HFAs must inspect no fewer units than the number specified for projects of the relevant size as set forth in the Low-Income Housing Credit Minimum Unit Sample Size Reference Chart. Agencies have discretion to inspect and review more units as they see fit. 2. The "all-buildings" rule is retained in the final regulation except for properties that undergo REAC inspections. The IRS does is concerned that HFAs may not all have inspectors as well-trained as the HUD-approved REAC inspectors and is therefore requiring a physical inspection of all buildings when the property is not undergoing a REAC inspection. 3. A major change in the final regulation is the "reasonable notice time frame." The temporary regulations provide that reasonable notice is generally no more than 30-days, but they also provide a very limited extension for certain extraordinary circumstances beyond an Agency s control such as natural disasters and severe weather conditions. These final regulations shorten the reasonable notice requirement to a 15-day notice that a project will experience an upcoming physical inspection or file review.             The reason for this shortened timeframe is that the validity of an inspection sample would be destroyed if a project owner had an opportunity to selectively prepare the units in the sample for inspection. For this reason, an HFA must select the low-income units to inspect in a manner that will not give advance notice that a particular low-income unit will or will not be inspected. Accordingly, the final regulations clarify that an Agency may notify the owner of the particular low-income units for inspection only on the day of the inspection. As noted in the regulation, under the REAC protocol, HUD or HUD-certified REAC inspectors randomly select low-income units for inspection on the day of the inspection; HFAs are now required to do the same. 4. Treatment of scattered site or multiple buildings with a common owner and plan of financing. While a number of industry practioners recommended that in the case of scattered site or multiple buildings with common ownership and financing, the HFA be able to treat the project as a single project for compliance monitoring purposes - regardless of whether or not the owner made the multiple building election on the IRS Form 8609, the final regulation does not adopt this regulation. For compliance monitoring purposes, a project will be defined in accordance with Section 42 - an HFA cannot deem separate buildings to be a project if the 8609 multiple building project election has not been made. 5. All HFAs are required to amend their Qualified Allocation Plans (QAP) to include the requirements of this final regulation. On the date the QAP is amended, Revenue Procedure 2016-15 will be considered obsolete. QAPs must be amended no later than December 31, 2020. 6. The number of low-income units to be inspected and the number of low-income files to be reviewed may not be fewer than the numbers shown below: Low-Income Units in Project Minimum Units to Review 1 1 2                                                                      2 3                                                                      3 4                                                                      4 5-6                                                                   5 7                                                                      6 8-9                                                                   7 10-11                                                               8 12-13                                                               9 14-16                                                               10 17-18                                                               11 19-21                                                               12 22-25                                                               13 26-29                                                               14 30-34                                                               15 35-40                                                               16 41-47                                                               17 48-56                                                               18 57-67                                                               19 68-81                                                               20 82-101                                                             21 102-130                                                           22 131-175                                                           23 176-257                                                           24 258-449                                                           25 450-1,461                                                        26 1,462-9,999                                                     27 7. Random Selection Requirements: Agencies generally may not select the same low-income units of a low-income housing project for on-site inspections and file reviews, because doing so would usually give prohibited advance notice. This is a complete reversal of the original requirement that the units for physical inspection and file review be the same. The units must select the units for inspections or low-income certification review separately and in a random manner. 8. Meaning of Reasonable Notice: the 15-day notice period begins on the date the Agency informs the owner that an on-site inspection of a project and low-income unit file review will occur. Notice of more than 15-days, however, may be reasonable in extraordinary circumstances that are beyond an Agency s control and that prevent an Agency from carrying out within 15-days an on-site inspection for file review. Extraordinary circumstances include, but are not limited to, natural disasters and severe weather conditions. In the event of extraordinary circumstances that result in a reasonable-notice period longer than 15-days, an Agency must still select the relevant units and conduct the same-day on-site inspection or file review as soon as possible. 9. Use of the REAC Protocol: In order to use the inspection requirements relating to the REAC protocol, the inspection must satisfy the following requirements:             (i) Both vacant and occupied low-income units must be included in the population of units from which units are selected for inspection;             (ii) The inspection complies with the procedural and substantive requirements of the REAC protocol, including the requirements of the most recent REAC Uniform Physical Condition Standards (UPCS) inspection software, or software accepted by HUD;             (iii) The inspection is performed by HUD or HUD-Certified REAC inspectors; and             (iv) The inspection results are sent to HUD, the results are reviewed and scored within HUD s secure system without any involvement of the inspector who conducted the inspection, and HUD makes its inspection report available. 10. HUD Inspections that comply with the requirements of the REAC Protocol: the number of units required to be inspected under the REAC protocol satisfies the requirements of the final regulation concerning the number of low-income units the Agency must inspect. Also, the manner in which the low-income units are selected for inspection under the REAC protocol satisfies the requirements of the final regulation. 11. File Reviews for HUD Inspections that comply with the requirements of the REAC Protocol: An Agency that conducts physical inspections using the REAC protocol if not excused from following the requirements of the final regulations in selecting the files for review. 12. Circumstances under which the same files and units may be chosen for inspection: If an agency chooses to select the same units for on-site inspections and file reviews, the Agency must complete both the inspections and file reviews before the end of the day on which the units are selected.             It is important to note that the final regulation does not include a provision for desk audits of files. The regulation states that the Agency may review the low-income certifications wherever the owner maintains or stores the records (either on-site or off-site).             Clearly this final regulation makes some significant changes to the way HFAs will monitor LIHTC properties for compliance and will require that owners adjust expectations relative to manner in which the reviews will be performed. As noted earlier, all these changes must be in place no later than December 31, 2020.

The Family Self-Sufficiency (FSS) Program - A Tool for Section 8 Owners

The Family Self-Sufficiency (FSS) Program was authorized by Congress in 1990 and is administered by the Department of Housing & Urban Development (HUD). FSS helps low-income families get out of poverty by combining financial education and coaching with savings incentives. Eligible residents include those associated with (1) vouchers; (2) public housing; and (3) Project-Based Rental Assistance (PBRA). FSS allows participating households to save rent increases attributable to earnings growth in a special escrow account, the savings of which can be accessed for long-term financial goals, like homeownership or college. FSS turns the disincentive of getting a better job into a powerful incentive for employment and earnings. Despite this, less than five percent of eligible families nationwide are enrolled. At its core, FSS is an asset-building tool and financial incentive. A key to success in the FSS program is high-quality, individualized financial coaching to help residents devise plans, set goals and work toward these goals. PHAs and multifamily owners that want to operate an FSS program must submit an FSS Action Plan to the Regional HUD field office. The action plan must describe the PHA or owner s policies and procedures for the FSS program, providing information on the number of families expected to participate, selection procedures, incentives to encourage participation, activities and supportive services, and a timetable for program implementation. When an individual enrolls in FSS, the program lasts five years with an option to extend. Participating residents can graduate early if they are employed and have been free of cash welfare assistance for 12-months. Financial Coaches Financial coaches assist with the project launch process, outreach to residents, enrollment, and coordination with property management in setting up escrow accounts. They also provide workshops on budgeting, credit/debt management and saving, as well as individualized coaching. Participation Participation in the FSS program is voluntary for owners of Section 8 housing. Those who are interested should contact their HUD Regional Office for detailed information.