Low-Income Housing Credit Disaster Relief for Hurricane Sandy
The IRS issued Revenue Notice 2012-68 on November 5, 2012, effective after October 22, 2012, providing emergency housing relief as a result of Hurricane Sandy. The Notice allows State Housing Agencies in states with areas that were declared major disaster areas by President Obama as a result of Hurricane Sandy. The Notice permits housing agencies to provide approval to project owners to provide temporary emergency housing for displaced individuals. “Displaced individuals” are people who resided in a jurisdiction designated for individual disaster assistance and who has been displaced because his or her residence was destroyed or damaged by Hurricane Sandy. Such persons may be accepted as residents in any LIHTC project in the United States – not just in disaster designated areas.
Suspension of Income Limits
Projects approved by the State Agency may suspend the use of the LIHTC income limits when renting units to displaced individuals. Each Agency will determine the period of time during which the temporary housing may be provided, but in no case will it extend past November 30, 2013 (temporary housing period).
Status of Units
A displaced individual temporarily occupying a unit during the first year of the credit period will be deemed a qualified low-income tenant for purposes of determining qualified basis, and for purposes of meeting the project’s elected minimum set-aside (20/50 or 40/60). After the end of the temporary housing period established by the Agency, the displaced individual will no longer be considered a qualified low-income tenant. At that point, to preserve the credits for the unit, the displaced individual will either need to be qualified or replaced by a qualified low-income resident.
Vacant units, or units never previously occupied after the first year of the credit period that are temporarily occupied by a displaced individual will maintain the status the unit had before move-in of the displaced individual. In other words, a vacant unit that was previously qualified by a low-income household will continue to be treated as a qualified vacant unit, and a unit that has never been occupied will continue to be treated as a unit never occupied. If there are occupants in the building with income in excess of 140% of the applicable income limitation, the move-in of a non-income eligible displaced person will not cause application of the Available Unit Rule. While the displaced individuals are housed, the project owner is not required to attempt to rent the units to low-income tenants.
It should be noted that the neither the student status nor the income of the displaced resident will effect their eligibility under this Notice.
Suspension of Non-Transient Requirements
The non-transient requirements of Section 42 shall not apply to units providing temporary housing, meaning that six-month leases are not required for displaced individuals.
All other rules and requirements of the §42 program will continue to apply during the temporary housing period approved by the applicable Agency. At the end of the temporary housing period, all rules relative to the Section 42 Program will resume, including the applicable income limits, the available unit rule, the non-transient requirements, and the requirements of the Vacant Unit rule. Any individual rented to after the temporary housing period will be required to meet the requirements of the §42 program in order for the unit to be considered low-income.
To qualify as a displaced individual, the person must have resided in a jurisdiction designated for individual assistance by FEMA as a result of Hurricane Sandy.
Certifications & Recordkeeping
Project owners are required to maintain and certify information on each displaced individual, including:
- Ø Name
- Ø Address of damaged residence
- Ø Social Security Number
- Ø Statement signed under penalties of perjury by the displaced individual that, because of damage to the individual’s residence in a jurisdiction designated for Individual Assistance by FEMA as a result of Hurricane Sandy, the individual requires temporary housing.
The owner must notify the Agency that vacant units are available for rent to displaced individuals, and once occupied by a displaced individual, the date the individual began temporary occupancy and the date the project will discontinue providing temporary occupancy as established by the Agency.
Rent Restrictions
Rents for low-income units that house displaced individuals may not exceed the existing rent-restricted rates for the low-income units in accordance with §42. In other words, the maximum rent allowable under §42 may be charged for the units housing the displaced individuals.
Existing Tenants
Existing residents of occupied low-income units cannot be evicted or have their tenancy terminated as a result of efforts to provide temporary housing for displaced individuals.
Interested owners should contact the appropriate Housing Finance Agency for information in making units available as housing for displaced persons.