LIHTC and HOME
Did you know that approximately seventy percent of Low-Income Housing Tax Credit (LIHTC) properties also have HOME funding? I recently heard this statistic quoted by an industry expert and it led me to wonder how many of our customers are managing properties that feature both LIHTC and HOME assistance. And how many of those with NCHM’s Tax Credit Specialist (TCS) certification, I wondered, know the HOME program requirements and are confident in their ability to manage compliance for both programs?
For a little history lesson, HOME was initially funded by HUD in 1992 and the HOME Rule is found in 24 CFR Part 92. The program is designed to increase the supply of affordable housing for a sustainable period by capping rents at affordable levels and restricting occupancy to Low and Very-Low households. It’s funded through Participating Jurisdictions (PJs) which are units of state and local government that receive annual block grants of Federal HOME funds from HUD. The PJs then award HOME funding, either through grant or loan, to develop affordable properties. So, the goals of the program are much the same as those of LIHTC.
The two programs blend together quite nicely, as well, since they are both geared toward income qualification being the primary component of eligibility. LIHTC targets households at fifty and sixty percent of Area Median Income and HOME targets Low (80% AMI) and Very-Low (50% AMI) households for eligibility, so there is a slight discrepancy there which is usually easy enough to manage. One of the trickier aspects of maintaining compliance between the two is when it comes to rents, however. When a Very-low HOME renter, paying Low HOME rent, becomes over-income at recertification, you may have to charge them High HOME rent in order to stay in compliance with the HOME regulations. Then what happens when the High HOME rent exceeds the gross rent limit for LIHTC?
The question of recertification can also be problematic when blending these two programs, especially in light of the fairly recent HERA provision that no longer requires annual tenant income certification at 100% LIHTC properties. HOME has maintained its annual recertification requirement, so how does the discrepancy between the two programs work?
NCHM advises that when program regulations conflict, managers should always comply with the regulation that is the most restrictive. Sometimes this will be obvious, such as with annual recertification requirements, but sometimes it is not so obvious. And when managing multiple subsidies at one site, which is also a possibility, it can become even more obscure.
So, what is a manager to do? For starters, take a look at our latest compliance offering, Blended Occupancy Specialist (BOS), has the answers for you when it comes to managing layered properties. It provides thorough review of program differences between LIHTC, HUD project-based programs, and HOME. Most importantly, the goal of the course is give you all the tools to develop a personal compliance and management matrix in order to establish good compliance strategies and maintain compliance at your blended sites. BOS classes are being offered beginning in April, so check out the schedule on our website at www.nchm.org and register today!