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HUD Requests Comments Related to Impact of Income Limit Policy on LIHTC Properties

Published by Thomas Stagg on Wednesday, January 17, 2024 - 10:10AM

The U.S. Department of Housing and Urban Development (HUD) issued a notice Jan. 10 on the changes in methodology used in income limits.  

The notice discussed the income limit cap (for more information on the income limit cap, read this blog post), however, in the notice HUD asked for responses to six questions. All questions indirectly impact low-income housing tax credit (LIHTC) developments, but questions four and six directly ask about income and rent limits at LIHTC properties. It is important that LIHTC users provide feedback to HUD so that it can appropriately set policies and understand the effects of its income policies on LIHTC developments. Comments are due Feb. 8. 

The six questions are paraphrased as follows:

  1. Is a cap of 10% appropriate for HUD’s income limit calculation methodology?
  2. With many tenants having fixed income, have income limits kept pace with other social programs that provide basic income for individuals and households who would also need housing assistance such as the elderly, those with disabilities and/or homeless veterans? That is, are individuals or families that would have been eligible in previous years now no longer eligible because income limits have not kept pace in your area? Or are more tenants eligible than had been the case previously?
  3. HUD does a series of adjustments when arriving at LIHTC income limits–what other criteria, if any, should HUD use when considering whether to make such adjustments in addition to those in existing policy?
  4. For LIHTC property owners, in the past have you raised your rents in LIHTC units to the maximum allowable year-over-year increases? HUD then asks for more information about your developments and tenants.
  5. Should income limits consider direct measures of costs, such as wages or insurance, instead of, or in addition to, its high housing cost adjustment, recognizing that HUD may currently lack the statutory authority to do so? If so, which specific costs should HUD consider, and which measurements or data would you recommend as a reference?
  6. Does HUD’s income limits methodology help or hinder the use of Housing Choice Vouchers in LIHTC-financed properties?

HUD has shown that it is willing to listen to public comment and public comment goes a long way to helping shape HUD policy. For example, in the last few years, HUD has changed its calculation methodology in relation to fair market rents to use more private data and changed its income limit methodology to use more contemporaneous American Community Survey data. As such, all interested parties are encouraged to respond to HUD’s request for comment.

The Income Limits Working Group is planning to submit public comment. To join the working group, click here. For a discussion on how the cap has historically been calculated, how the notice clarifies the calculation of rent and income limits, and the possible effects of the decision as well as future dates to circle on the calendar, listen to the Jan. 16 episode of the Tax Credit Tuesday Podcast.

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