We’ve just recently purchased an AHP development. What is the first thing we should do?

There are five steps that an owner should take immediately:

• Review the LURA and the Owner’s Compliance Manual to become familiar with the development’s set-aside and AHP Compliance procedures
• Prepare a management plan that incorporates AHP compliance procedures and required AHP documents and forms
• Train all person who will be involved in applicant intake, property management and reporting
• Develop a strategy for marketing and working with existing occupants and vacancies to achieve full compliance
• Establish contact with Mississippi Home Corporation, your state monitoring agency

If I have questions about the proper way to calculate a tenant’s annual income, where can I go to find answers?

Under the AHP, a tenant’s income is calculated based on gross annual income. For more information on income calculations, refer to HUD Handbook 4350.3.

If I fall below my total set-aside, how long do I have to hold vacant units available for qualified households?

Generally speaking, vacant units must be held until the development has met both the total set-aside and the very low-income set-aside requirements.

Can I have full-time students live in my development?

Yes. Unlike other affordable housing programs, full-time students can reside in your development provided they are income eligible.

What income should I count for students?

Generally, the first $480.00 of the EARNED income of students (excluding the head, co-head or spouse) is counted on verified full-time students.  In addition, any financial assistance (excluding student loans) above the cost of tuition must also be counted as income.  For students over the age of 23 with dependent children and students living with their parents, financial assistance should NOT be counted.  You should count any UNEARNED income received by the student.

Is a telephone verification a valid form of employment verification?

Yes, provided the proper procedures and documentation is followed. Third-party written verifications are preferred; however, in cases where these methods are not feasible, telephone verifications may be used. For more information on telephone verifications, contact MHC.

When verifying the income of tenants with Section 8 Certificates, is the income verification provided by the housing authority acceptable?

No.  Owners/managers should obtain third-party written verifications from the income source.

When can I expect the income and rent limits to change, and how can I obtain a copy of the latest change?

AHP income and rent limits are updated annually when HUD publishes its revised figures for area median incomes. Generally, these updates are released in the late winter or early spring each year. MHC will provide owners with updated limits as they become available from FDIC.

If a change in household income occurs between annual recertifications is the manager required to recertify the household?

No. Tenants are only required to report a change in household income at the time of recertification. Therefore, managers are not required to monitor household changes that occur between recertifications.

How should rent changes in between certifications be documented?
Notation of a rental change must be made to the applicable TIC form with the effective date and reason(s) for the change.  A new certification is not needed to simply document a revised rental amount.

What happens if a unit is leased as a qualifying household and later found out that the household is not income qualified?

If a calculation error was made by management in certifying a household and it is found that the household never income qualified for the unit, the household may not be removed, and the owner/manager must rent the next available unit to a qualified tenant. On the other hand, if the tenant provided false information, he/she can be evicted for violation of lease clause (Refer to Owner’s Compliance Monitoring Manual). To avoid this situation, it is important to verify the income of a household prior to occupancy.

If a development’s VLI set-aside has been met, but the total set-aside has not been met, can the remaining units be rented to VLI eligible tenants?

Yes. Just remember a qualifying unit’s designation reflects the income and rent level of the tenant and the owner must also adhere to those limits when designating a unit.

If I rent unrestricted units to low income and very low-income tenants (after I have met my total and low income set-asides), must I designate their units as qualifying units?

No. An owner is only obligated to designate enough qualifying units to meet the set-asides. All other tenants can be listed as unrestricted, and no AHP documentation is required. It must be noted however that keeping a “reserve” of low and very low-income households is a good way to expedite the replacement of vacated qualified units.

Does AHP have occupancy requirements specifying the unit size (i.e., number of bedrooms) appropriate for a given household?

No. An owner is expected to establish their own occupancy requirements and apply them consistently throughout the development, as well as comply with state or local laws regarding occupancy restrictions, if applicable.

When does a unit actually become a “qualifying unit”?

According to the AHP, a unit is considered a qualifying unit when it is occupied by an income eligible household and the required paperwork (TIC, lease, verifications) has been acquired.

What should I do if I receive the income and rent limits from MHC and they are lower than the previous year limits?

In the event that the rent and income limits decrease from one year to the next, it is important that the owner reduce the rents immediately. Although it is unusual for AHP rents to go down, owners must revise rents for qualifying units that exceed the new limits. It is also important to note that the rents are not required to be reduced below the initial approved rents in place at the time the building was sold by FDIC under the AHP to the original owner.

At recertification, if the income of a qualifying low-income unit is over the applicable income limit, but not over the 140% limit, must I evict them?

No. A qualifying unit can continue to carry the status of a qualifying unit as long as the income has not exceeded the current income limits by 140%. If a low-income household income exceeds 140% of the current low-income limit on recertification, the tenant is reported as “over-income” and the rent may be adjusted to the market rent for unrestricted units (subject to state/local laws and terms of the lease). Under no circumstance should an owner displace a household on the grounds that they are no longer income eligible. An owner must also adhere to the conditions of the next available unit rule.

When a household’s income is determined to be over the income limit by 140% at recertification, is the rent on that unit still restricted?

No. If the income of a qualifying household exceeds 140% of the current low-income limit on recertification, the tenant is reported as “over-income” and the rent may be adjusted to the market rent for unrestricted units (subject to state/local laws and terms of the lease). Again, under no circumstance should an owner displace a household on the grounds that they are no longer income eligible. An owner must also adhere to the conditions of the next available unit rule.

How does a vacancy affect my set- asides?

When a vacancy occurs, the qualifying unit can continue to be counted and reported as a qualifying unit until it is re-occupied or replaced with another qualifying unit. If the unit is not replaced with a qualifying unit, then a replacement unit is needed. Thus, a vacancy can only affect the set-aside of a development if it is replaced with a non-qualifying household. Extreme caution should be taken in handling vacancies.

If a qualifying household wishes to transfer to another unit in the development, is it still a qualifying unit?

Yes, if it is still income qualified. The owner would need to shift the designation of the qualifying unit to the newly occupied unit. If the unit involves a change in unit size, the applicable AHP rent limit changes must be used to reflect the size of the newly occupied unit.

Generally speaking, when is a development considered to be out of compliance with the AHP requirements?

Developments that fail to meet the provisions of their LURA procedures in the HP Owner’s Compliance Manual or the State Agency may fall out of compliance with requirements primarily for any of the following violations:

• Improperly leasing vacant units during pre-compliance or whenever below the set-aside requirement
• Failing to maintaining a sufficient number of qualifying units
• Failing to determine and verify qualifying tenant income at least annually or improperly determining eligibility
• Charging rents in excess of applicable AHP rent limits
• Failing to submit timely reports to the Corporation
• Failing to pay the required administrative/noncompliance fees