Compliance Update | August 2020
IRS grants COVID-19 income recertification, monitoring relief

In response to the ongoing COVID–19 pandemic, the IRS is providing temporary relief from certain requirements for qualified low-income housing projects and qualified residential rental projects. Please note the following changes, pursuant to § 1.42-13(a):

INCOME RECERTIFICATIONS. An Owner of a low-income building is not required to perform income recertifications under § 1.42-5(c)(1)(iii) in the period beginning on April 1, 2020, and ending on December 31, 2020. The Owner must resume the income recertifications as due under § 1.42-5(c)(1)(iii) after December 31, 2020.
 
What does this mean for you? The intent of this notice is to provide relief and is not a change in policy. KHRC continues to expect a good faith effort be made in completing recerts, including Sample Form 18/self-certifications. Additionally, we expect owner/agents to thoroughly document the tenant file as to why they were unable to complete the recert should that happen and then reference Notice 2020-53. For recerts that were not obtained from 4/1/2020-12/31/2020, forgiveness will be granted by noncompliance not being reported. This applies to the files inspection process and the annual reporting process as it relates to data entry in the Procorem Tenant Event Portal. 
 
COMPLIANCE-MONITORING. For purposes of § 1.42-5, an Agency is not required to conduct compliance-monitoring inspections or reviews in the period beginning on April 1, 2020, and ending on December 31, 2020. The Agency must resume compliance-monitoring inspections or reviews as due under § 1.42-5 after December 31, 2020.

What does this mean for you? KHRC is currently continuing compliance monitoring. Electronic reviews of tenant files continue, and additional precautionary measures have been put in place for physical inspections. At this time any inspections that cannot be completed between now and 12/31/2020 (due to time restraints or other concerns), will be rescheduled as soon as possible, mostly likely early 2021. 
 
The full text of notice 2020-53 can be found here .
HUD releases temporary COVID-19 vacancy guidance
On July 6 HUD issued a memorandum to the multifamily housing industry, Processing of Special Claims for Vacancy During the COVID-19 Pandemic .   This memorandum provides instructions for the processing of Special Claims for Vacancy Loss for properties affected by COVID-19 during the period of March 27, 2020 through September 30, 2020.

HUD’s Office of Multifamily Housing (MFH) has temporarily modified the start date for Special Claims for Vacancy Loss to accommodate delays in filling vacant units as a result of the COVID-19 National Emergency. During this time, when occupancy was prevented due to the impact of the COVID-19 pandemic, MFH will accept Special Claims for Vacancy Loss for 60 days starting from the prior resident’s Move-out Date as opposed to the Make-ready Date. In addition, certain documentation submission requirements are amended for owner/agents processing Vacancy Claims relating to COVID-19.
Electronic signature, transmission, and storage

On May 26, 2020, HUD's Office of Multifamily Housing published Housing Notice 2020-04, Electronic Signature, Transmission, and Storage – Guidance for Multifamily Assisted Housing Industry Partners . This notice provides guidance on acceptable procedures for use of electronic signatures and the transmission and storage of documents and files. The notice pertains to all HUD forms and O/A created documents related to asset management, Section 8 contract renewal, and occupancy policies.

With the issuance of this notice, HUD’s multifamily industry partners are permitted (but not required) to use electronic signatures and electronic file transmission and retention.
August 24 - 28
Webinar Series

Mark your calendars for our annual Kansas Housing Conference--to be held VIRTUALLY this year and completely FREE of charge! Join us for in-depth compliance training, discussions on housing needs, resources, and pandemic response guidelines, and individual technical assistance.

Compliance topics:
  • Setting up an Effective Tax Credit Compliance Calendar
  • Violence Against Women Act (VAWA)
  • The Income Average Test Minimum Set Aside
  • Leasing Fundamentals
  • Avoiding Costly File Errors in Affordable Housing
  • Fair Housing/Limited English Proficiency and Assistance Animals vs. Service Animals

General sessions:
  • Housing Needs in Kansas
  • Identifying Housing Resources and Potential Solutions
  • Looking Ahead: Expanding Housing Opportunities in Kansas
  • Managing Housing Development and Administration During a Pandemic

Preview our agenda , learn about our speakers , and register online.
Income exclusions: Census income
In 2009, HUD issued Housing Notice 09-16,  Exclusion from Annual Income of Temporary Employment from the U.S. Census Bureau,  to provide instruction regarding exclusion of temporary income received, by residents, from the U.S. Census Bureau. On June 5, 2020, HUD released a reminder to owner/agents that, pursuant to Section 24 CFR §5.609(c)(9), any temporary income received from the U.S. Census Bureau is excluded from annual income.
 
Temporary (in this case) is defined as employment lasting no longer than 180 days per year and not culminating in permanent employment. 

Keep in mind that if the resident earns more than $600 in a quarter or more than $2400 in a 12-month period, this will cause EIV to generate an EIV Income Discrepancy. You will need to document the tenant file to explain that the income was not included on the 50059 because it is excluded by regulation.
Updated rules and guidance
Sample size requirements:
A proposed IRS rule calls for HFAs to monitor the lesser of 20 percent of the units in a project or the number of units reflected in the Low-Income Housing Credit Minimum Unit Same Size Reference Chart .  This proposal rescinds the sample size requirement that was part of the final regulations published February 26, 2019, reinstating previous IRS policy in place from 2016 .  

Streamlining and Fast Act:
On May 7 HUD released Streamlining Administrative Regulations for Multifamily Housing Programs and Implementing Family Income Reviews Under the Fixing America's Surface Transportation (FAST) Act. This final rule changes the guidelines regarding Streamlined Certification for Fixed Income Families. When creating certifications in Year 2 and Year 3 of Streamlined Certification, HUD will allow owner/agents to use Streamlined Verification of Fixed Income and previous year’s values for income that is not fixed (e.g. gift income). This change took effect on June 8.
Reminders and resources

The 2020 HOME and Housing Trust Fund (HTF) income and rent limits took effect on July 1.

HUD's Promoting Housing Stability During The Covid-19 National Emergency brochure provides guidance for assisted and insured housing programs administered by HUD's Office of Multifamily Housing Programs. Note that while the brochure provides federal guidance, local governments may have additional protections.

Effective May 22, HUD lifted the suspension of Management and Occupancy Reviews (MORs) performed by PBCAs in locations where there are no restrictions by state or local law to prevent them from doing so. On June 23, 2020 HUD issued a memorandum that extended the date for PBCAs to conduct MORs without entering resident units until September 30, 2020 (or such later date as HUD may determine).