By now you have probably heard that the 2015 HOME income and rent limits have been published. They were released on May 8, 2015 with an effective date of June 1, 2015. For all practical purposes the income limits mirror the HUD program limits and MTSP limits for LIHTC, which were both published and effective in March of this year.
But because the HOME program originates from a different branch of HUD – the Office of Community Planning and Development (CPD), rather than HUD Multifamily – there is usually a lag of at least a month between the two publication dates. If you are managing a property that is exclusively HOME-funded, then you simply wait on the release of the HOME limits. But, in the more likely event that you blend HOME with other programs, the later publication date becomes more problematic.
Here’s an example. If you have taken NCHM’s Blended Occupancy Specialist (BOS) course, you know that we have a penchant for Pocahontas County, Iowa, as that is where our BOS case study property is located. In checking the income limits, I found that the county’s 2015 Area Median Income (AMI) is $60,100 which is up from $59,600 in 2014. That means that the resulting income limits, published per household size, will be higher in 2015 as well. So for HUD programs and LIHTC, the new, higher limits were published and became effective on March 6, 2015. For HOME, however, the new limits were just published and are not even effective until June 1, 2015. So when HOME is blended with either LIHTC or HUD project-based assistance you would have to continue using the lower 2014 limits until the given effective date. This is an instance where the most restrictive limit (meaning the lowest) would prevail when qualifying applicants, and would of course impose an extension before the new, higher limits could be used for this purpose. So be careful if you find yourself in this situation because if you had already started using the higher limits, then you would be out of compliance for HOME!
Because HOME rent limits are usually lower than the LIHTC limits, when the two programs are blended the HOME rent limits tend to prevail as the more restrictive of the two, limiting the amount of gross rent that can be charged for those blended units. Using our favorite Pocahontas County as an example again, I found where the two-bedroom rent limit for a low HOME rent unit (targeted to those qualifying at 50% AMI) for 2014 was $579 and for the same size LIHTC unit at the same set-aside it was $671. For 2015, they are $593 and $696 respectively. So, when the HUD program and MTSP income limits were published in March of 2015, a property that had HOME and LIHTC blending would have been limited to renting their two-bedroom units targeted at 50% AMI for a gross rent of $579 and would not be able to increase the gross rent charged for these units to $593 until June 1. LIHTC rent limits are calculated using the applicable income limits, so without HOME funding attached the two higher limits would prevail.
One other thing that I noticed when reviewing the new HOME income limits is that the 30% limit published for HOME is not necessarily going to be the same as the Extremely Low Income (ELI) limit published for HUD programs, even though Extremely Low has traditionally equaled 30% AMI. The reason for this is the change to the definition of Extremely Low Income per the appropriations bill that was passed in June of last year for HUD programs. That bill defines ELI as very low-income families whose incomes do not exceed the higher of the federal poverty level or 30% of Area Median Income. This change does not apply to HOME, so please be careful here, toom if you have a 30%, or ELI, set-aside at your property to make sure that you are using the appropriate income limit for the program(s) in place.
Blended properties are always going to more complex than those with single programs in place and I believe that properly managing the income limits and rent limits for these sites can be among the biggest challenges that we face. If you have further questions about the examples given here (or any other blended issues for that matter), please forward them to us through our eHotline.