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Some States and Localities Increase the Minimum Wage for 2017

Managers of affordable housing properties spend a good deal of their time verifying and calculating income. All managers are aware that most workers must be paid a minimum wage (some workers are exempt from the requirement). While the federal minimum wage is $7.25 per hour, many states and localities have higher minimums. 19 states and 21 local jurisdictions raised those minimums as of January 1, and some increases are dramatic. For example, Arizona raised its minimum wage from $8.05 to $10 per hour. Maine went from $7.50 to $9.00 and both Washington State and Massachusetts raised the minimum to $11 and hour. Six states plus D.C now have minimum wages in excess of $10 per hour. Some localities have set the bar even higher. Several California cities have minimum wages of $12 or more and Seattle requires some employers to pay $15 per hour. As we enter the new year, managers of affordable housing should make sure they know what the minimum wage is for their state and locality and apply this to all working applicants who are not exempt from minimum wage laws.

IRS Notice 2016-77 - QAP Preferences Relative to Community Revitilization Plans

On December 27, 2016, the IRS issued Notice 2016-77. This Notice relates to the issue of satisfying the required Qualified Allocation Plan (QAP) preference relating to Community Revitalization Plans.   Background Section 42 (m) of the Internal Revenue Code (the "Code") requires that every Low-Income Housing Tax Credit (LIHTC) allocation be made pursuant to a QAP. The code specifies certain preferences and selection criteria that each QAP must contain. Three preferences are required, and one of these is that the QAP must give "preference in allocating housing credit dollar amounts among selected projects to projects which are located in qualified census tracts and the development of which contributes to a concerted community revitalization plan " (emphasis added). Qualified Census Tracts (QCTs) are HUD-designated areas with either a high percentage of households below a certain income level or with a poverty rate above a certain level.   The IRS Position The IRS has determined that in some cases, HFAs have given preference to projects in QCTs without regard to whether the projects contribute to a concerted community revitalization plan (CRP). In some cases, if an LIHTC project benefitted a particular neighborhood, HFAs treated the project itself as a CRP. There is a reason that a preference is granted only to projects that contribute to a concerted community revitalization project. The project itself cannot be a CRP. The notice states that the position of Treasury and the IRS is that unless there is a plan with more elements than the project itself no later than the allocation date, the preference fails to apply, indicating that if the allocation would not have occurred without the preference, the allocation itself may be invalid. The IRS is requesting comments regarding guidance that should be issued relating to the preference. Comments are due to the IRS no later than February 10, 2017. Comments may be emailed to Notice.comments@irscounsel.treas.gov. When emailing comments, include "Notice 2016-77" in the subject line.

IRS Revenue Ruling 2016-29 - Regarding Qualified Allocation Plan Provisions Relating to Local Approval of LIHTC Allocations

This recently issued Revenue Ruling addresses the issue of whether or not Section 42 of the Internal Revenue Code requires or even encourages Housing Finance Agencies (HFAs) to reject proposals for low-income housing tax credit (LIHTC) developments if the locality where the project will be located does not specifically support the project. While not referenced in the ruling, this guidance is a direct response to criticisms of HFAs (and the lack of IRS oversight of HFAs) in a recent Government Accountability Office (GAO) study of the LIHTC program. The ruling uses an unidentified state as an example. It should be noted that the GAO report found that 12 HFAs (Alaska, Arkansas, Chicago, Georgia, Illinois, Kansas, Montana, Nevada, New Mexico, North Dakota, Oklahoma, and South Dakota) make approval of LIHTC applications contingent on letters of support from local officials, and another ten agencies (Guam, Indiana, Kentucky, Massachusetts, Ohio, Texas, Virginia, Washington, DC, West Virginia, and Wisconsin) award points for such local support. The QAP of the particular state used as an example contains provisions that strongly favor applications for LIHTC projects that receive direct local government support. For example, under the point system that the HFA uses in judging among projects, points are granted to projects that - Show measurable community support for the project, such as written statements from neighborhood organizations in the area of the proposed project; Receive a commitment of development funding by the locality; and Receive written support for the project, as evidenced by a written statement from the state legislator elected from the district in which the project is proposed to be developed. The HFA takes the position that Section 42 requires that allocations be made only to projects that receive the approval of the locality where the proposed project is to be located. If such approval is not forthcoming, the HFA will reject the application. This basically gives communities a "local veto" over proposed LIHTC projects. In this particular state, local approval is much more likely for projects in areas with a higher percentage of minority residents. This results in fewer economic opportunities for minorities in higher-opportunity, non-minority communities. In effect, it allows communities to perpetuate segregation by race. This practice as resulted in the allocation of tax credits in predominately lower-income or minority areas, resulting in the continuation of residential racial and economic segregation. Section 42(m)(1)(A)(ii) does prohibit an allocation of credits to a building unless the allocating agency "notifies the Chief Executive Officer (or the equivalent) of the local jurisdiction within which the building is located of such project and provides such individual a reasonable opportunity to comment on the project." Analysis The IRS ruling (which based on any reasonable reading of the law is correct) is that the HFA is misinterpreting the code provision. The HFA interpretation of the law is inconsistent with both the language of Section 42 and federal fair housing policy. The Language in the Code The code requires that each local jurisdiction be given a "reasonable opportunity" to comment on any proposal to allocate tax credits within the jurisdiction. It does not require the jurisdiction s "approval." The clear meaning of "reasonable opportunity to comment," according to the IRS ruling, is that the jurisdiction has the right to comment, or even object, to the proposal, but they do not have the right of final approval. The HFA must use its own judgment in the approval or denial of a project, and local officials should not be given veto authority. Federal Fair Housing Requirements As significant as the HFA s misreading of Section 42 is, the most serious failure of the HFA policy is that it perpetuates racial segregation in clear violation of federal fair housing law. The only way the HFA reading of the code could be correct is if Congressional intent, when creating the LIHTC program, was to reverse or circumvent federal fair housing policy. There is no legislative history on which the HFA could have reached this conclusion. There is nothing in either the language of Section 42 or its legislative history indicating that Congress intended to change the original intent of the Fair Housing Act, which was "to provide, within Constitutional limitations, for fair housing throughout the United States." The Ruling "When state housing credit agencies allocate housing credit dollar amounts, Section 42 (m) (1)(A)(ii) does not require or encourage these agencies to reject all proposals that do not obtain the approval of the locality where the project developer proposes to place the project. That is, it neither requires nor encourages housing credit agencies to honor local vetoes." Whether or not the IRS would have issued this ruling without the recent GAO report is unknown. What is clear is that the ruling is on point relative to both the wording and intent of the code. There is no question that it is the intent of some local governing authorities to prevent integration of certain communities. This ruling will make it more difficult for HFAs to be complicit in such local attempts. Owners and developers operating in states where QAPs give any degree of veto authority to local government over the awarding of federal tax credits should remind the HFA of this ruling.

VAWA Emergency Transfer, Documentation, and Lease Bifurcation Requirements

The most detailed and complex part of the HUD Final Rule on VAWA deals with the emergency transfer requirements. This article focuses primarily on those requirements. I am also covering basic documentation and verification requirements, as well as final rule elements relating to lease bifurcation.   Emergency Transfer Documentation Requirements The VAWA statute does not apply documentation requirements to emergency transfers. The HUD final rule works to clearly outline these requirements. The final rule allows housing providers, at their discretion, to require that tenants requesting transfers submit a written request before a transfer occurs certifying that they meet the criteria for an emergency transfer. To make this process easier on owners, HUD has created a model emergency transfer request, and has recently made that model document available. Housing providers may accept third party documentation if that documentation is offered by tenants, but are not permitted to require any third party documentation in order to determine whether a tenant is eligible for an emergency transfer. HUD clarifies in this final rule that housing providers may require tenants seeking emergency transfers to document an occurrence of domestic violence, dating violence, sexual assault, or stalking, in addition to documenting eligibility for an emergency transfer, if the individual has not already provided documentation of that occurrence. Housing providers must keep in mind that individuals may provide self-certification in lieu of any other documentation do document an occurrence of a VAWA-protected incident. The final rule allows housing providers to require that tenants seeking emergency transfers provide documentation - which could be a written request - that they meet the requirements for a transfer. Those requirements are that the individual expressly request the transfer and either reasonably believe that there is a threat of imminent harm from further violence if the tenant remains in the same dwelling unit that the tenant is currently occupying, or, in the case of a tenant who is a victim of sexual assault, the tenant also qualifies for a transfer if the assault occurred on the premises during the 90-calendar-day period preceding the date of request for the transfer. The final rule makes clear that while housing providers may require that tenants submit a written request for a transfer and certify the need for a transfer, they may not require third-party documentation for an emergency transfer. This is a change from the proposed rule. In the final rule, HUD acknowledges that some tenants may request an emergency transfer for the purpose of obtaining a superior housing unit or to break their lease. However, HUD does not believe this justifies a third party documentation requirement. Therefore, housing providers are not permitted to require that tenants requesting an emergency transfer under VAWA submit third party documentation to qualify for an emergency transfer. The final rule also states that housing providers must keep a record of all emergency transfer requests and the outcome of such requests. These records must be retained for a minimum of three years.   Emergency Transfer Costs Under the final rule, housing providers will not be required to bear moving costs that tenants and their household members generally pay, including application fees and deposits, in addition to costs to physically move households and their belongings. HUD understands that moving costs may be prohibitive for some victims and encourages housing providers to bear these costs where possible, or to work with victims to identify potential sources for funding the cost of transfers. However, there is no requirement that housing providers bear or assist in payment of these costs.   Model Transfer Requests The model transfer request form that HUD has developed and made available is only a model and housing providers are not required to use it. However, the model form may serve as documentation of the need for a transfer and owners should give serious consideration to using the model form.   Transfer Plans HUD s emergency transfer plan contains specific elements that must be adopted by all housing providers, regardless of the HUD housing program in which they participate. In terms of time periods, in the final rule HUD does not mandate specific time periods for responding to emergency transfer requests. However, HUD may consider establishing timeframes in the future. HUD does include language in the model emergency transfer plan requiring that the housing provider maintain confidentiality with regard to any information a tenant provides when requesting an emergency transfer. Unless the tenant gives the housing provider written permission to release the information, or disclosure is required by law or required for use in an eviction proceeding or hearing regarding termination of assistance from the covered housing program.   Transfer Eligibility The issue was raised during the comment period for the proposed rule regarding whether or not minors would be eligible for emergency transfers. The final rule states that un-emancipated minors are not eligible to sign leases under HUD programs. For this reason, housing providers should consider contacting child welfare or child protective services, or law enforcement when a minor claims to be the victim of domestic violence, dating violence, sexual assault, or stalking. Owners are reminded that the provisions in VAWA relative to emergency transfer requests do not supersede eligibility requirements for any housing program - HUD or otherwise.   Effectiveness of Transfers HUD notes in the final regulation that a transfer to a unit within the same project in which the perpetrator resides may not be safe for victims. However, if the unit in the same development is the only one available, the victim should be given the choice of whether or not to transfer to the unit. So, HUD does not prohibit emergency transfers within the same property, but encourages housing providers to endeavor to identify an available unit in another property.   Emergency Transfers for Sexual Assault HUD has revised the final rule to clarify that in the case of a tenant who is a victim of sexual assault, the tenant qualifies for a transfer if either (1) the tenant reasonably believes that there is a threat of imminent harm from further violence if the tenant remains within the same unit that the tenant currently occupies, or (2) the sexual assault occurred on the premises during the 90-calendar-day period preceding the date of request for transfer.   The Scope of the Transfer Provision The final rule has been revised to state that any emergency transfer plan must allow tenants who are victims of domestic violence, dating violence, sexual assault, or stalking to make an internal emergency transfer under VAWA when a safe unit is immediately available. The proposed rule regarding transfers to a unit in another covered housing program if such transfer is permissible under applicable program regulations has been removed from the final rule. In a very good provision to the final rule, HUD has declined to require housing providers to keep units vacant for a period of time after a victim has moved from a unit. Some commenters on the proposed rule felt that filling a unit too soon after the move-out of a victim would alert the perpetrator that the victim had moved. HUD will allow housing providers to leave units vacant if they believe that this action will be in the best interest of the property s residents, but HUD is not requiring that housing providers take this action.   Recommendations While HUD does not require the use of its Model Transfer Plan, it does require that any transfer plan include the components of the HUD model. For this reason, using the HUD model makes sense and I recommend doing so. There is no reason for owners of covered properties to reinvent the wheel and the HUD Model Transfer Plan is well written and pretty easy to understand. I also recommend use of the model for non-HUD properties that are also subject to VAWA 2013, such as the Low-Income Housing Tax Credit program.   VAWA Documentation & Verification Requirements Part of the final VAWA rule outlines the forms that are required for implementation of VAWA. HUD makes it clear that except for documentation of emergency transfers, the victim has discretion over what form of documentation will be submitted to show that the individual is a victim of domestic violence, dating violence, sexual assault, or stalking. In order to reduce confusion between programs, HUD has created a certification form that will be used for all covered programs. That certification form may be downloaded from HUDClips. HUD also recognizes that some VAWA victims may not be able to acquire third party documentation to resolve conflicting evidence within 14 business days, as was contained in the proposed rule. For this reason, the rule has been revised and tenants will have 30-days to submit third party documentation in cases of conflicting evidence. Housing providers may grant extensions to this 30-day period. Based on available information, it is apparent that some owners and Public Housing Agencies (PHAs) are demanding Orders of Protection, Harassment Orders, Trespass orders, or police reports prior to providing the VAWA required protections. Some are even requiring multiple forms of proof. As a result, the final rule states clearly that applicants or tenants may submit - at their discretion - any one of the listed forms of documentation. Except in cases involving conflicting evidence, housing providers are required to accept self-certifications. To reiterate, it is the victim who may choose whether to submit self-certifications or third party documentation.   VAWA Lease Bifurcation Provisions VAWA 2013 allows (but does not require) owners to "bifurcate" leases in order to protect victims of domestic violence, dating violence, sexual assault, or stalking. The purpose of a lease bifurcation is to remove the perpetrator from a unit without evicting, removing, terminating assistance to, or otherwise penalizing a victim who seeks to remain in the unit. In the final VAWA rule, HUD has included provisions relating to lease bifurcation. One of the major issues addressed in the final rule is what happens if the perpetrator who is removed from a unit due to bifurcation is the family member whose characteristics qualified the rest of the family to live in the unit or receive assistance. This final rule maintains the provisions in the proposed rule that housing providers must give victims a 90-day time period for establishing eligibility for a program and finding new housing, and that extensions for up to 60-days may be provided. However, statutory requirements of various programs are not superseded by VAWA 2013. For example, the Section 236, public housing, and Section 8 programs allow pro-ration of rent or assistance for certain families where eligibility has not been established for all members. In these cases, remaining tenants following a lease bifurcation may still need to establish their eligibility for the covered housing program if they have not provided documentation of satisfactory immigration status. Under the Section 202 and Section 811 statutes, HUD cannot continue to subsidize a unit for remaining family members after a lease has been bifurcated if at least one of the remaining family members has not established eligibility for the program. Although this regulation provides that if a landlord chooses to bifurcate a lease under VAWA for a unit with a Project Rental Assistance Contract (PRAC) under the Section 202 or 811 programs, and the remaining family members have not established eligibility for the program, the landlord must provide a reasonable time period of 90-days for the remaining family members to remain in the unit. However, HUD will no longer be able to provide a subsidy to that unit during the time when it has not been established that an eligible individual is residing in the unit. For this reason, the final rule has been revised to state that this 90-day calendar period will not be available to a remaining household member if statutory requirements of the covered program prohibit it, and that the 90-day calendar period also will not apply beyond the expiration of a lease, unless program regulations provide for a longer time period. For example, where an individual is ineligible because of immigration status, HUD is statutorily prohibited from permitting that family member to stay in the unit beyond 30 days if satisfactory immigration status cannot be proven.   Bifurcation Logistics The definition of bifurcation in the regulations explains that if a VAWA act occurs, "certain tenants or lawful occupants" can be evicted while the remaining "tenants or lawful occupants" can continue to reside in the unit. This final rule clarifies that the terms "tenants or lawful occupants" does not include " affiliated individual." Affiliated individuals are neither tenants nor lawful occupants. Affiliated individuals are not protected under VAWA 2013 or HUD s VAWA regulations. However, a tenant may be entitled to VAWA protections and remedies because an affiliated individual of that tenant is or was a victim of domestic violence, dating violence, sexual assault, or stalking. In no case may an affiliated individual themselves seek remedies from the housing provider. State and local laws may address lease bifurcation and, where they do, covered housing providers must follow these laws.  

HUD Issues Correction Regarding VAWA Model Forms

A few days ago I sent a memo to clients regarding the availability of four model VAWA forms on HUD s web page. Those forms are now available on HUDClips. The forms are: Notice of Occupancy Rights Under VAWA; Model Emergency Transfer Plan; Certification of Domestic Violence; and Emergency Transfer Request.   HUD has also corrected the date by which owners/agents must provide the Notice of Occupancy Rights and Certification form to applicants when assistance is being denied or at the time the new household moves into the property. HUD had originally stated that date as December 16, 2017; it should be December 16, 2016. Also, beginning on December 16, 2016, O/As must provide the Notification of Occupancy Rights and Certification form with any notification of eviction or termination of assistance. O/As are required to develop and implement an Emergency Transfer Plan by June 14, 2017, and should use the Departmental Emergency Transfer Plan form as a guide. O/As may require tenants seeking an emergency transfer to provide a written Emergency transfer request. To make this process easier, O/As may provide the Departmental Request for to tenants. Multifamily housing will be updating the Lease Addendum form, HUD-91067 in the future. In the meantime, O/As may continue to use the current form. All O/As operating properties under HUD's Office of Multifamily Housing should download the model documents noted above and begin the implementation process, keeping in mind the June 14, 2017 deadline for the Emergency Transfer Plan.

HUD Comment Request for Housing for Older Persons Act of 1995 (HOPA)

HUD Comment Request for Housing for Older Persons Act of 1995 (HOPA) As required by federal law, on December 13, 2016, HUD published a 60-day Notice of Proposed Information Collection of the Housing for Older Persons Act of 1995 (HOPA). The purpose of the notice is to solicit comments from the public and agencies concerning whether the required information collection is necessary for program performance purposes. The notice is also useful for reminding owners and managers of their responsibilities in the operation of housing for older persons. Background The Fair Housing Act prohibits discrimination on the basis of familial status (individuals living in households with one or more children under the age of 18). However, the Act exempts three categories of "housing for older persons" from liability for familial status discrimination: Housing provided under any state or federal program which HUD determines is "specifically designed and operated to assist elderly persons (as defined in the state or federal program)," Housing "intended for, and solely occupied by persons 62 years of age or older," and Housing "intended and operated for occupancy by at least one person 55 years of age or older per unit ( 55 and older housing)." In December 1995, Congress passed HOPA as an amendment to the Fair Housing Act (FHA). HOPA modified the "55 and older" exemption under the FHA by eliminating the requirement that a housing provider had to offer "significant facilities and services specifically designed to meet the physical or social needs of older persons." In order to qualify for the HOPA exemption, a housing community must meet each of the following criteria: At least 80% of the occupied units in the community must be occupied by at least on person who is 55+; The housing provider must publish and adhere to policies and procedures that demonstrate the intent to operate housing for persons age 55+; and The housing provider must demonstrate compliance with "rules issued by the Secretary for verification of occupancy, which shall provide for (age) verification by reliable surveys and affidavits." The information that is required to be collected is necessary to demonstrate a housing provider s eligibility to claim the "55 and older" housing exemption as an affirmative defense to a familial status discrimination complaint. It is common practice in the senior housing industry to publish and consistently enforce age verification rules and policies and procedures that indicate an intent to provide housing for older persons. Under HOPA, a "55 or older" housing provider should conduct an initial occupancy survey of the community to verify compliance with HOPA s "80% occupancy" requirement and should maintain such compliance by periodically reviewing and updating existing age verification records for each occupied dwelling unit at least once every two years. The HOPA exemption also requires that a summary of the occupancy survey results must be made available for public inspection. No individual resident information is required; the summary may simply indicate the total number of dwelling units actually occupied by persons age 55+. A housing provider may be required to show information on individual households only in the case of a familial status discrimination charge, and in such cases, only HUD will be entitled to the information. These record-keeping requirements are the responsibility of the housing provider that seeks to qualify for the HOPA exemption. Owners and managers of 55+ housing should ensure that the recordkeeping requirements for such housing are maintained and available to the public and HUD.

HUD Model VAWA Forms Made Available

HUD has created Microsoft Word files for the four model forms included in the Violence Against Women Act (VAWA) final rule that was published in the Federal Register on November 16, 2016. These forms are now available on the Office of Multifamily Housing's web page. (https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh)   The forms are: *Notice of Occupancy Rights Under VAWA; *Model Emergency Transfer Plan; *Certification of Domestic Violence; and *Emergency Transfer Request.   These forms are model forms and owners may customize them as long as they contain the same information and language. During the 12-month period following the effective date of the VAWA regulation, owners/agents (O/As) must give each household the notice of occupancy rights and the certification form either during the annual recertification or lease renewal process, or, if there will be no recertification or lease renewal for a household during the first year after the rule takes effect, through other means. The 12-month period is December 16, 2016, through December 15, 2017. Beginning on December 16, 2017, O/As must provide the Notification of Occupancy Rights and Certification forms to applicants when assistance is being denied or at the time the new household moves into the property. The forms do not have to be provided to every applicant on a property's waiting list. The Office of Multifamily Housing will be updating the current VAWA certification form, HUD-91066. In the meantime, O/As should use the current form. O/As are required to develop and implement an Emergency Transfer Plan by June 14, 2017, and should use the Departmental Emergency Transfer Plan form as a guide. O/As may require tenants seeking an emergency transfer to provide a written Emergency transfer request. To make this process easier, O/As may provide the Departmental Request for to tenants. Multifamily housing will be updating the Lease Addendum form, HUD-91067 in the future. In the meantime, O/As may continue to use the current form. All O/As operating properties under HUD's Office of Multifamily Housing should download the model documents noted above and begin the implementation process, keeping in mind the June 14, 2017, deadline for the Emergency Transfer Plan.

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