As a tax credit manager, you must be aware of households' composition and be aware of how life changes such as pregnancies among your households or applicants can invoke specific HUD rules when it comes to eligibility, income, and unit size. For example, suppose a married couple applies for a two-bedroom unit at your site.
Unless you get the right documents from the owner, you may not be able to manage your tax credit site effectively. Part of keeping your site in compliance is making sure your staff knows all the requirements and restrictions that affect it. The most authoritative sources for much of this information are forms and agreements that the owner signed before the compliance period even began. Therefore, it's important to get the documents you need from the owner as early as you can to ensure that your site complies with them.
A tornado hits and wipes out three of the 10 buildings at your site. A flood leaves the ground-floor units at your site uninhabitable. A fire roars through two floors of your high-rise and severely damages 10 units. If one of these or a similar disaster occurs at your tax credit site, you’ll have additional financial worries associated with property loss. The owner has tax credits tied up with each of the destroyed units, and unless you know what to do to protect those credits, the owner could lose them along with the property.
Press releases are a great and inexpensive way to get your site’s name recognized in the community and attract qualified applicants, says communications consultant Rose Reichman. You can send press releases with newsworthy information about a new or existing site to local newspapers and other industry publications and sources. If the publications give your site favorable coverage, this generates an image of success to support your lease-up efforts.
In today's economy, providing affordable housing to low-income families is more important than ever. There may be plenty of applicants, but there are also considerable challenges in verifying that they're qualified for the LIHTC program and in keeping up with rising operational costs. Last month, the Insider conducted a survey of tax credit site managers across the country to find out about these and other challenges they're currently facing.
Sometimes you must transfer a household to another unit to comply with fair housing law. Or a household may ask to move to another unit for personal reasons, such as a better view. But transferring households at tax credit sites can be tricky, especially at sites with more than one building. To avoid making inconsistent decisions, and to avoid any noncompliance traps or discrimination complaints that those inconsistencies might cause, include a provision covering unit transfers in your house rules.
Sometimes a household's income rises above tax credit program limits. When this happens, you have to comply with an IRS rule known as the “next available unit” (NAU) rule. But many managers fail to comply with this key rule. And that can have costly consequences. If the appropriate NAU isn't rented to a qualified, low-income household, the IRS may take back credits that the owner has already claimed and bar the owner from taking credits in the future.
Occasionally a household member will tell you that she has no income in order to reduce the household's total income and qualify it for the unit. Or a tax credit household that's also subject to Section 8 subsidies may claim that the entire household has no income so as to reduce the portion of the rent that the household must pay. “Dealing with zero-income families is one of the most common complaints of managers of affordable housing projects, especially those with rental assistance,” says tax credit consultant A.J. Johnson.
Some of your residents may be affected by layoffs and persisting unemployment. These residents may be eager to break their lease if they can no longer afford the rent. But under a written lease, residents are responsible for the entire term of the lease provided that there are no legal reasons to break the lease. Unemployment isn't a reason for breaking the lease with no repercussions.
According to HUD's latest report on U.S. Rental Housing Characteristics, vacancies in assisted rental housing are much lower than the national average. Fewer units are affordable to low-income renters. In fact, according to the 2011 Housing and Homelessness policy statement distributed by the National Health Care for the Homeless Council, low-income renters have faced the tightest market for affordable housing since 1985.
