HOUSI NG CRE DI T INCOME AVE RAGING ST AT E I MPL E ME - - PowerPoint PPT Presentation

HOUSI NG CRE DI T

INCOME AVE RAGING

ST AT E I MPL E ME NT AT I ON

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What Is Inc ome Ave r aging?

• NCSHA le g isla tive prio rity; e na c te d a s pa rt o f

the Co nso lida te d Appro pria tio ns Ac t o f 2018.

• Ne w minimum se t-a side o ptio n a llo wing q ua lifie d units

to se rve ho use ho lds e a rning up to 80 pe rc e nt o f AMI , a s lo ng a s the a ve ra g e limit in a de ve lo pme nt is no mo re tha n 60 pe rc e nt o f AMI .

• At le a st 40 pe rc e nt o f units in the de ve lo pme nt must

b e inc o me q ua lifie d.

What Is Inc ome Ave r aging?

• Applie s to unit de sig na tio ns, no t individua l te na nt inc o me s.
• De sig na tio ns must b e se t a t 10 pe rc e nt inc re me nts

(20, 30, 40, 50, 60, 70, a nd 80 pe rc e nt o f AMI ).

• NCSHA b e lie ve s the de c isio n to a llo w inc o me a ve ra g ing

is a t the disc re tio n o f the sta te .

E xample : 10- Unit Pr

• je c t

1 unit a t 80% AMI 8 units a t 60% AMI 1 unit a t 40% AMI = 60% a ve ra g e 3 units a t 80% AMI 3 units a t 60% AMI 2 units a t 50% AMI 2 units a t 20% AMI = 56% a ve ra g e 2 units a t ma rke t ra te 3 units a t 80% AMI 2 units a t 50% AMI 3 units a t 30% AMI = 53.75% a ve ra g e

Re nt L imits Unde r Inc ome Ave ra g ing

I nc o me a ve ra g ing a pplie s to both inc o me a nd re nt limits.

• Re nt limit o n a n 80 pe rc e nt unit is 30 pe rc e nt o f

80 pe rc e nt o f AMI .

• Re nt limit o n a 30 pe rc e nt unit is 30 pe rc e nt o f

30 pe rc e nt o f AMI . T he hig he r re nt c harg e d o n the 80 pe rc e nt unit allo ws yo u to o ffse t the lo we r re nt c harg e d

• n the 30 pe rc e nt unit.

State and F e de r al Imple me ntation Ac tions

I nc o me ave rag ing is a pe rmane nt part o f the tax c o de , e ffe c tive Marc h 23, 2018, fo r ne w de ve lo pme nts making the minimum se t-aside e le c tio n and re q uire s no fo rmal ac tio n fro m state s, I RS, o r HUD.

But, in a pe rfe c t wo rld:

• Sta te s wo uld mo dify the ir QAP (o r re la te d do c ume nts)

to pro vide g uida nc e to a pplic a nts.

• I

RS wo uld re vise F

• rms 8609 a nd 8823.
• I

RS wo uld issue g uida nc e o n issue s la c king c la rity.

• HUD wo uld issue ne w inc o me limits fo r e a c h o f

the 10 pe rc e nt inc re me nt de sig na tio ns.

E ligible De ve lopme nts

• 2018 a nd future a wa rds? Ye s, a t sta te disc re tio n
• 2016 a nd 2017 c a rryo ve r a llo c a tio ns witho ut

c o mple te d 8609? Ye s, a t sta te disc re tio n

• E

xisting de ve lo pme nts with c o mple te d 8609? No

• Re syndic a tio n? T

e c hnic a lly po ssib le , b ut limite d a pplic a b ility

Applic ation to Bond- F inanc e d De als

• While the Ac t do e s no t c ha ng e §142, inc o me

a ve ra g ing ma y still b e use d in b o nd-fina nc e d Ho using Cre dit de ve lo pme nts a s lo ng a s the de ve lo pme nt sa tisfie s b o th the I A minimum se t-a side a nd o ne o f the minimum se t-a side s a pplic a b le to ta x-e xe mpt b o nd fina nc ing .

• Units with inc o me limits a b o ve 60 pe rc e nt o r 50 pe rc e nt,

a s a pplic a b le , do no t c o unt fo r purpo se s o f b o nd c o mplia nc e .

Unit De signation

• T

he Co de do e s no t spe c ify the pro c e ss b y whic h

• wne rs ma y de sig na te units a t spe c ific inc o me limits.
• Ab se nt c o ntra ry g uida nc e fro m I

RS, sta te s ha ve the a utho rity to de te rmine a pro c e ss fo r unit de sig na tio n.

• NCSHA e nc o ura g e s sta te s to inc o rpo ra te unit

de sig na tio ns into e xte nde d-use a g re e me nts a nd c a rryo ve r a llo c a tio ns.

Shifting Unit De signations

• T

he Co de is no t c le a r a s to whe the r a unit’ s de sig na tio n c a n b e c ha ng e d.

– Ne xt a va ila b le unit rule will ne c e ssita te so me shifting

• f units in mixe d-inc o me de ve lo pme nts.
• Ab se nt c o ntra ry I

RS g uida nc e , sta te s ma y de c ide whe the r to pe rmit shifting de sig na tio ns in 100 pe rc e nt lo w-inc o me de ve lo pme nts.

– F

• rma l no tic e a nd do c ume nta tio n pro c e ss

– Unit pa rity po lic ie s – Co nside r de ve lo pme nt a nd c o mplia nc e pe rspe c tive s

Ne xt Available Unit Rule

• A te na nt is o ve r inc o me if his/ he r inc o me e xc e e ds

140 pe rc e nt o f the g re a te r o f 60 pe rc e nt o f AMI

• r

the de sig na te d limit fo r his/ he r unit.

• I

f a te na nt g o e s o ve r inc o me , must re nt ne xt a va ila b le unit to a q ua lifie d te na nt.

– I

f the a va ila b le unit is a lo w-inc o me unit, tha t unit sta ys a t its de sig na te d le ve l, re g a rdle ss o f the de sig na te d le ve l o f the o ve r-inc o me te na nt’ s unit.

– I

f the a va ila b le unit is a ma rke t-ra te unit a nd the re is

• ne o ve r inc o me te na nt, the a va ila b le unit

b e c o me s a lo w-inc o me unit de sig na te d a t the le ve l

• f the o ve r-inc o me te na nt’ s unit. T

he de sig na tio n is no t c le a r if the re a re mo re tha n o ne o ve r inc o me te na nt.

Complianc e Conside r ations

• Allo wing shifting o f unit de sig na tio ns in 100 pe rc e nt

lo w-inc o me de ve lo pme nts

• Cha rg ing hig he r c o mplia nc e mo nito ring fe e s to

I nc o me Ave ra g ing de ve lo pme nts

• Mo re re g ula r te na nt inc o me ve rific a tio n — e ve n fo r

100 pe rc e nt lo w-inc o me de ve lo pme nts

• Mo nito ring multiple b uilding pro je c ts
• No nc o mplia nc e re po rting

Pote ntial IRS Guidanc e

• Wha t pro c e ss sho uld sta te s use fo r de sig na ting units?
• Onc e se t, c a n unit de sig na tio ns b e c ha ng e d?
• Wha t ha ppe ns whe n o ne unit is o ut o f c o mplia nc e

c a using the a ve ra g e to g o a b o ve 60 pe rc e nt?

• Ho w to se t ne xt a va ila b le unit de sig na tio n whe n

multiple te na nts in units o f diffe re nt de sig na te d inc o me le ve ls g o o ve r inc o me a t the sa me time ?

• E

xplo re a pplic a tio n to e xisting de ve lo pme nts?

Que stions?