Armanino Blog

Affordable Housing: CARES Act Update

April 27, 2020

The CARES Act includes a temporary 120-day moratorium on evictions for nonpayment of rent beginning Mar. 27, the date of the act and ending July 24. Importantly, a tenant does not have to provide his/her landlord with any proof of hardship due to COVID-19. This applies to all properties with a federally-backed mortgage or those participating in the following affordable housing programs:

  • Low-Income Housing Tax Credit (LIHTC) properties
  • Public Housing program
  • Section 8 Housing Choice Voucher program
  • Project-based Section 8 housing
  • Section 202 supportive housing for the elderly
  • Section 811 supportive housing for persons with disabilities
  • Section 236 multifamily rental housing
  • Section 221(d)(3) Below Market Interest Rate housing
  • HOME Investment Partnerships program
  • USDA Rural Development programs
  • Housing Opportunities for Persons with AIDS program
  • McKinney-Vento Act programs

On April 22, the U.S. Department of Housing and Urban Development (HUD) issued an updated list of FAQs based in part on issues raised by public housing agencies (PHAs) as well as provisions in the CARES Act. The key points associated with compliance are:

  • Stimulus payments, “recovery rebates” and the $600 weekly enhancement unemployment payment are excluded from income.
  • If the PHA determines that a family is unable to pay the flat rent because of financial hardship, the PHA must immediately allow the requested switch to income-based rent.
  • The 120-day temporary moratorium applies to all tenants, regardless if employment was affected by COVID-19. However, the accumulated rent will be due at the end of the 120 days. A late rent notice should be sent out without fees/charges, and a notice of vacate cannot be issued until July 24.
  • To use electronic signatures for leases will depend on state or agency’s own policies.
  • Until further notice, the Real Estate Assessment Center (REAC) is postponing all property inspections.
  • HUD gives an additional six months for submission of the single audit reporting package and REAC filing.
  • The semi-annual Enterprise Income Verification (EIV) certification goes on as scheduled. All certifications must be completed by April 29.
  • HUD extends the obligation end date and expenditure end date for all open capital fund grants by one year.
  • The CARES Act provides new public housing funds and permits PHAs to use existing capital funds and operating funds flexibly until Dec. 31.

On April 1, HUD released a list of median family incomes and income limits for Fiscal Year (FY) 2020. Median incomes are used as the basis for income limits in several HUD programs, including the Public Housing, Section 8 Housing Choice and Project-Based Voucher, Section 202 housing for the elderly and Section 811 housing for persons with disabilities programs, as well as in programs run by agencies, such as the Department of the Treasury, the Department of Agriculture and the Federal Housing Finance Agency. Community planning and development programs, as well as HOME investments, also rely on HUD income limits in their administration.

Compliance Updates from the IRS Regarding LIHTC

On April 10, the Internal Revenue Service (IRS) issued Notice 2020-23, “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.” Under the notice, taxpayers now have until July 15 to accomplish the following for their LIHTC properties which otherwise were due to be performed on or after April 1:

  • 10% expenditure test under IRC Section 42(h)(1)(E) and (F)
  • 24-month period to meet the minimum rehabilitation expenditure requirement in IRC Section 42(e)(3)(A)(ii)
  • Annual owner certification of compliance in regulation 1.42-5(c)(1)
  • Annual tenant income certification requirement in regulation 1.42-5(c)(1)(iii)

The notice also covers the following, although its application to each is unclear:

  • 10-year rule for claiming credits on an existing building as required in IRC Section 42(d)(2)(D)(i)(IV); the requirement is to hold a property for 10 years, so there is not necessarily a deadline to extend
  • Minimum set-aside requirement as referenced in IRC Section 42(g)(3)(A); this test is applied at the end of a calendar year Requirement that a low-income housing commitment must be in effect as of the beginning of the year for a building to receive credit as referenced in Section 42(h)(6)(J); these agreements needed to have been in place on Jan. 1

For the latest regulatory changes and other information on keeping your organization running through disruption, visit our COVID-19 Resource Center.

April 27, 2020

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