April 10, 2024

2024 Multifamily Tax Subsidy Projects (MTSP) Income Limits Are Released!

HUD has released the 2024 income limits for the tax credit/bond programs. They are effective 4/1/24. The new limits must be implemented within 45 days for LIHTC properties (by 5/16/24). Projects that are receiving an allocation of credits or that will be placed in service within the 45 days will be able to select the most favorable 2023 or 2024 limits with which to start. For allocations in this timeframe, the limits selected will affect the gross rent floor. For projects that will be placed in service within the 45 days, it will affect the income and rent limits that the project will lease up with and hold harmless to in 2024, if necessary. The 2024 MTSP limits are here. For more information on ‘back to basics’ on how to select the correct income limits for LIHTC projects, visit Costello Compliance blog post.

Additionally, HUD published FAQs on the limits which can be found here.

Importantly, the new limits do NOT apply to HOME, CDBG, NSP, and NHTF programs. HUD is expected to publish limits for these programs in the next couple of months.

HOTMA and HUD Passbook Rate-Implementation Guidance

OHFA wants to remind Owners/Management agents on the implementation of HOTMA. Per our guidance issued in February, if an Owner/Management agent decides to implement some of the HOTMA rules (i.e. hybrid approach) regarding income and asset calculations (Section 102 of HOTMA) prior to January 1, 2025, an OHFA clarification record must be placed in the tenant file explaining which parts of the HOTMA rule were used to certify the tenant. If an Owner/Management agent decides to implement all of the HOTMA rules prior to January 1, 2025, an OHFA clarification record must be placed in the tenant file stating certification was conducted using HOTMA rules.  

Importantly, OHFA will not enforce compliance for HOTMA-related file errors (i.e., will not issue 8823s) for certifications with effective dates prior to January 1, 2025. 

Additionally, OHFA has received several inquiries regarding the use of OHFA’s TIC at projects with HUD funding. Use of the .40% passbook rate has apparently led to TRACS error messages and rejection of asset calculations from HUD. OHFA implemented HUD’s new passbook rate of .40% in January based upon HUD’s initial guidance. However in February, 2024, per PIH Notice 2023-27 Implementation Guidance: Section 102 and 104 of HOTMA, HUD allowed owners discretion in implementing the new passbook rate. The new implementation guidance is found in Attachment F, subtopic F.5. In this guidance, HUD updated the start date of January 1, 2024, with the date on which the PHA/MFH Owners implement the new passbook rate. 

Given HUD’s updated guidance, OHFA will allow owners of LIHTC, HOME, NHTF and HUD funded projects to implement the new passbook rate of .40% when their software is HOTMA compliant. However, if the .06% passbook rate is used, OHFA will require a clarification record to be placed in the tenant file showing how income/assets were calculated and then manually correct OHFA’s TIC. 

Questions about this implementation guidance should be directed to OHFA’s DevCo Help Desk.

OHFA’s HOME/NHTF Lease Addendum and HUD’s Model Lease

After consultation with HUD, Owners/Management agents can now use OHFA’s Home/NHTF Lease Addendum for projects with Section 8 where the HUD Model Lease is used. The Addendum is used only for units funded with HOME or NHTF. In other words, a HOME or NHTF unit in which tenants sign a HUD Model Lease can use OHFA’s HOME/NHTF Lease Addendum. The lease provisions in OHFA’s Addendum come from HUD’s HOME guidance in the HOME Guide for PJs. The requirements start in Section 5.3Cs. However, HUD requires OHFA to use the following clause in our HOME/NHTF Lease Addendum:

“If any provision of this addendum conflicts with an applicable HUD model lease or program policy directive related to the project’s receipt of rent subsidies, the model lease or policy directive shall control unless waived by HUD in writing.”

As such, OHFA’s HOME/NHTF Lease Addendum has been revised to reflect this clause. Owners/Management agents must begin using the revised Addendum for all new move-ins effective May 1, 2024, regardless if the project has Section 8 funding or not. Questions regarding this matter should be directed to OHFA’s DevCo Helpdesk.

New HOTMA Resource!

Recently, Costello Compliance released a HOTMA Crosswalk to help industry partners navigate all the specific HOTMA changes. Be sure to check it out! Click here for a downloadable version. More information can be found on Costello’s website.

While HOTMA is a huge and challenging change for the industry, there really are reasons to embrace it:

• Retirement accounts are gone! Retirement accounts that are recognized as such by the IRS will never be counted as assets. Owners/Management agents will never need to determine or even ask about the values of these accounts. However, if a tenant is taking periodic withdrawals from an account, they will still be counted as income.

• Child support and alimony orders - Goodbye to proving tenants were trying to get court-ordered amounts! Owners/Management agents only have to ask about and count what child support or alimony is received, not entitled to receive.

• Current checking account balance! This is less work for all of us because we no longer have to use a six-month average; only use the current balance.

• Safe-harbor “means tested” determinations! HOTMA built in flexibility for LIHTC, HUD PBRA, HOME, NHTF, PHAs, and other HUD programs to share determinations of income to eliminate the need for multiple verifications. Sharing determinations among housing programs makes sense and will save us a lot of stress and work.

Coming Soon!

A new LIHTC Compliance Manual will soon be published. The manual will reflect the HOTMA Rule. Publication is anticipated by July. Stay tuned!

New OHFA Compliance Staff

OHFA is pleased to welcome three new auditors to the Compliance Team:

Hannah Amare

Pinni Terrell

Aletha Williams

Hannah comes from POAH Communities where she was a property manager.

Pinni previously worked for the Cincinnati Metropolitan Housing Authority as the RAD coordinator/property manager.

Aletha previously worked for Active Residential Management as a property manager.

Stay Informed! 

Subscribe to OHFA’s email distribution list at Join Our Email List, which allows you to receive important notifications concerning regulatory and policy changes, development updates, and much more. Please forward the subscription link to all your staff who may benefit from this type of information.