1 HOME Multi Family HOME/LIHTC TRAINING

2 HOME Monitoring Operations Manual The 2010 HOME Monitoring Operations Manual was completed by ICF International. ICF provides technical assistance and training to HUD program recipients the manual has not changed The Manual is more inclusive of ADFA rules and regs The Manual provides monitoring check sheets for the HOME programs

3 HOME Program Owner Responsibilities The ALL important….. HOME AGREEMENT contains the following: The amount of funding The total number of units, the number of affordable units and how many of the affordable units are HOME units

4 HOME Agreement cont. The gross annual income requirements and rent restrictions for such units-the set asides ADFA set asides are 60% High HOME or 50% Low HOME

5 HOME Agreement cont. Terms regarding payments from ADFA during project completion Loan terms-reserves, operating, security deposits will be monitored Consequences of Breaching any terms of the Agreement

6 Affordability cont. REHAB or ACQ of EXISTING HSG <$15,000/unit = 5 YEARS $15,000/unit-$40,000= 10 YEARS >$40,000/unit= 15 years REFI OF REHAB PROJECT Any amount = 15 years NC or Acq of New Hsg= 20 years

7 HOME Agreement cont. The affordability period is listed in the HOME agreement and may be different for each project, depending upon the HOME Activity, i.e., Tenant Based Rental Assistance, Homeowner Rehab, Multi-family housing The affordability period will be enforced by ADFA via a HUD approved deed restriction for the FULL affordability period. HOME affordability periods are minimum requirements. ADFA may establish longer periods of affordability.

8 HOME Agreement cont. The Agreement also includes: Affirmative marketing requirements Anti-lobbying rules Lead based paint requirements, if applicable Tenant data requirements Workplace requirements

9 HOME Agreement cont. Section 3 requirements (hiring lower income persons) Fair Housing reporting, regulatory and recordkeeping requirements Causes for Debarment and Suspension Remedies on Default

10 HOME Agreement cont. Records are to be retained 5 years AFTER the affordability period ends and the owner shall furnish and cause its subcontractors to furnish all reports, books, records and accounts, by ADFA, the Department of Housing and Urban Development or its agents or other authorized federal officials for purposes of investigation to ascertain compliance

11 HOME Agreement cont. ADFA reserves the right to inspect at any time during normal business hours any and all HOME activity accomplished under this Agreement to ensure compliance with HQS, (Housing Quality Standards), minimum housing codes, zoning, building and fire codes

12 HOME Agreement cont. The owner also acknowledges that they will make available at any time during normal business hours ALL financial, compliance records of activities pertaining to funding and the development covered by this Agreement to allow ADFA to conduct monitoring, performance, and compliance reviews and evaluations.

13 HOME Units A minimum of 20% of HOME units must be at the 50% HOME income limit, the remaining HOME units must be at the 60% HOME income* HOME units have two (2) rent limits; High HOME rent-50% LOW HOME rent-60% *HOME income limits and rents differ from LIHTC

14 HOME Units Fixed Units-the HOME units will always remain in specific units Floating Units-the HOME unit designation may float across the project to the next available unit same size or greater

15 HOME Units The income limit requirement is met upon initial occupancy (move-in) at either 50% or 60% as designated by the HOME Agreement The 50% unit is given the Low HOME rent designation The 60% unit is give the High HOME rent designation

16 HOME Units If at recertification the income rises ABOVE 50% (low HOME) but is below 60% (High HOME) the following applies depending on the type of HOME unit: Fixed: The unit would become a High HOME rent unit and the next available FIXED unit would become a low HOME rent unit

17 HOME Units Floating: The unit would become High HOME 60% rent and the next comparable unit same size or greater must be reoccupied by a household with an income at or below 50% (low HOME) *unit size requirements may differ when multiple programs are used

18 HOME unit If the incomes rise ABOVE 80% median at recertification, the household must pay the rent permitted by law or 30% of the family’s adjusted monthly income at recertification: FIXED: The unit remains a HOME unit until move out or the HOME rent is reassigned to the next available unit FLOATING: The unit remains a HOME unit until the next available unit of comparable size or greater* receives the affordable designation *use the most restrictive rule if multiple programs are used

19 HOME monitoring Monitoring is based on the TOTAL number of units on the property 1-4 units = every 3 years 5-25 units = every 2 years 26 or more = annually

20 LIHTC/HOME projects Affordable Unit designations (30%, 50%, 60%) are per building in LIHTC and do not float across the project in Arkansas without being an income qualified unit. Caution must be taken to use the most restrictive requirement, i.e., rents and incomes, in combined program units

21 LIHTC/HOME projects If you have a HOME unit, you must use the applicable HOME income limits and HOME rents for those units within a tax credit project If you received a 9% tax credit, at least 40% of the units must move in at the 50% limit per building if the project placed in service prior to 2008, using the most restrictive limit

22 LIHTC/HOME units Your HOME unit maximum allowable rent is calculated differently: HOME-what the tenant pays, plus the utility allowance, PLUS the rental assistance cannot exceed the maximum allowable HOME rent LIHTC-what the tenant pays, plus the utility allowance cannot exceed the maximum allowable LIHTC rent

23 LIHTC 140% over income unit Must return to applicable fraction #of units or square footage, which ever is greater Applicable fraction is total LIHTC units/total units or LIHTC sq ft/Total sq footage WHICHEVER IS GREATER. This is established in the first year Eligible Basis (bricks, i.e. building costs) X Application Fraction (% of LIHTC units over total units) or (LIHTC unit square footage over total square footage =Qualified Basis Qualified Basis x Applicable Credit = Annual Tax Credit

24 LIHTC/HOME units CAUTION: If you are using your HOME units in your tax credit set aside make sure that you watch the income limits, rent limits, subsidy amounts and transfers

25 LIHTC/HOME/RD High HOME (60%) rents can be lowered to project based RD Low HOME (50%) rents can be raised to RD rents HIGH (60%) HOME rents CANNOT raised to RD limits PROJECT BASED-Raise low income-50% -lower high income-60% HIGH HOME RENT (60%)CAN NOT GO UP TO PROJECT BASED LIMIT

26 LIHTC/HOME/other projects LIHTC and HOME recertifications are effective on the original move in date (the first day of occupancy) and annually thereafter Documents and signatures can be processed and are acceptable within 120 days of or before the effective date

27 LIHTC/HOME/other projects LIHTC and HOME use the Section definitions of income to determine household eligibility HOME and LIHTC use gross annual income to determine eligibility and exceeding limits HOME totals income from ALL assets; not just those over $5,000

28 LIHTC/HOME/other projects REMEMBER: In HOME, the tenant payment, utility allowance, plus subsidy cannot exceed the maximum allowable HOME rent. REMEMBER: Project based rental assistance rules

29 LIHTC/HOME/other projects LIHTC-As long as the tenant payment plus the utility allowance does not exceed the maximum allowable rent, the household is qualified Use the most restrictive rules pertaining to rents and over income recertifications

30 LIHTC/HOME/other projects There is not an interim recertification requirement in the HOME or LIHTC programs. All projected information must be completed within 120 days prior to the effective date You are required to use the ADFA Tenant Income Certifications for programs administered by ADFA.

31 LIHTC/HOME/other projects LIHTC projects are monitored within 180 days following the end of the first credit year and every three years thereafter. However, ADFA may monitor more often if necessary (for example non compliance found in 50% of units or files reviewed). HOME is monitored according to the TOTAL number of units in the projects.

32 LIHTC/HOME/other projects HOME Monitoring: 1-4 units every three years 5-25 units every two years-ADFA may also monitor LIHTC at this time if combined with HOME 26 or more units annually LIHTC-monitored a minimum of every three years

33 Other considerations Leases-HOME specifically restricts prohibitive language in leases - see lease check sheet Applications-Asset information must be more inclusive if there are HOME units Addendums may be needed for leases, applications, and tenant income certifications.

34 KEY Project Placed in Service income limit dates Before January 1, 2009 (On or Before 12/31/2008) Between January 1, 2009 and May 14, 2010 After May 14, 2010

35 Go to Novogradac.com This site has limits including HERA and rural areas; Compare to HUD income limits and regulations

36 Other programs income limits USDA you must comply with the more strict program rules HOME program rent and limits must be used for HOME specific units.

37 Compliance Audit All certifications and recertifiations must be current. If you fail to recertify in the LIHTC program, as long as the recertification is completed prior to the date of an audit notification, an 8823, Report of non compliance to the IRS, will not be issued, HOWEVER, this does not apply to the HOME units, which must be completed on time or they will be non compliant. Habitual tardiness will be reported as non compliance and may affect owner’s future funding.

38 Compliance Audit To take advantage of the rule just mentioned, new management companies should audit all files once they take possession of properties. Files should be documented and brought current as soon as possible. If not, an 8823 Report of Non Compliance could be issued to the IRS.

39 Compliance Audit WCMS Web Compliance Management System information must be updated no later than the 15 th of the following month. ANNUALLY each Fall ADFA transfers WCMS data to HUD which will report the LIHTC data to Congress. Projects must be clear of All ERRORS no later than August 15 th each year.

40 Training Check the ADFA website monthly for upcoming training classes and other important ADFA information.

41 ADFA Please feel free to contact me, Rhonda Kimble at OR (501)

42 QUESTIONS