Tips for Managing a Property with HOME and LIHTC Assistance

A significant number of low-income housing tax credit (LIHTC) properties have funds through the HOME Investments Partnership (HOME) Program. The HOME program is a block grant program administered by HUD. As with most funding sources, when an owner agrees to use HOME funds at an LIHTC property, then the owner is also required to commit to meeting the compliance requirements for the HOME program. However, if both sets of rules apply and need to be met, which take priority?

Although both sets of program rules apply, “the stricter requirements of each program must be met,” according to HUD’s 2009 Compliance in HOME Rental Projects: A Guide for Property Owners, prepared by ICF International. Below are some property management issues that vary between the programs and that are highlighted in the guide.

• Income Targeting/Occupancy Requirements.—The LIHTC property manager or owner should rely on its use agreements and the rules for each program to determine the number of HOME and tax credit units in the property, as well as the required household income for each unit at move-in. If a household’s income meets both program requirements and the rent is below maximum for both, the unit that household occupies can be counted toward the requirements of both programs. If a household meets only one set of requirements, the units can be counted for that program only.
• Rent Reductions.—If HOME rent limits or Fair Market Rents decline, rents at HOME/LIHTC properties may have to be lowered. According to the guide, “The HOME Program does not require that owners reduce rents for HOME-assisted units below the level in effect at the time of project commitment. However, LIHTC rules do not provide similar protections.” That means if a unit is counted toward both sets of requirements, and the rent limit decreases, a rent decrease may be necessary to ensure continued compliance with LIHTC rules.
• Section 8.—According to the guide, the LIHTC and HOME programs allow the maximum rent to exceed program requirements on units with project-based Section 8 rental assistance. “In HOME, this exception applies only for Low HOME Rent units.” The guide notes that the HOME rent limits apply to those units occupied by residents with tenant-based rental assistance.

For more information, see: Compliance in HOME Rental Projects: A Guide for Property Owners, 2009, prepared by ICF International and published by HUD’s Office of Community Planning and Development.