(a) Rent or Utility Allowance Violations of the maximum
allowable limit for the HTC program. Under the HTC program, the amount
of rent paid by the household plus an allowance for utilities, plus
any mandatory fees, cannot exceed the maximum applicable limit (as
determined by the minimum set-aside elected by the Owner) published
by the Department. If it is determined that an HTC Development, during
the Compliance Period, collected rent in excess of the rent limit
established by the minimum set-aside, the Owner must correct the violation
by reducing the rent charged. The Department will report the violation
as corrected on January 1st of the year following the violation. The
refunding of overcharged rent does not avoid the disallowance of the
credit by the IRS.
(b) Rent or Utility Allowance Violations of additional
rent restrictions under the HTC program. If Owners agreed to additional
rent and occupancy restrictions, the Department will monitor to confirm
compliance. If noncompliance is discovered, the Department will require
the Owner to restore compliance by refunding (not a credit to amounts
owed the Development) any excess rents to a sufficient number of households
to meet the set aside.
(c) Rent Violations of the maximum allowable limit
due to application fees. Under the HTC program, Owners may not charge
tenants any overhead costs as part of the application fee. Owners
must only charge the actual cost for application fees as supported
by invoices from the screening company the Owner uses.
(1) The amount of time Development staff spends checking
an applicant's income, credit history, and landlord references may
be included in the Development's application fee. Development Owners
may add up to $5.50 per Unit for their other out-of-pocket costs for
processing an application without providing documentation. Example
622(2): A Development's out-of-pocket cost for processing an application
is $17.00 per adult. The property may charge $22.50 for the first
adult and $17.00 for each additional adult.
(2) Documentation of Development costs for application
processing or screening fees must be made available during monitoring
reviews or upon request. The Department will review application fee
documentation during monitoring reviews. If the Development pays a
flat monthly fee to a third party for credit or criminal background
checks, Owners must calculate the appropriate fee to be charged applicants
by using the total number of applications processed, not just approved
applications. Developments that pay a flat monthly fee must determine
the appropriate application fee at least annually based on the prior
year's activity. If the Department determines from a review of the
documentation that the Owner has overcharged residents an application
fee or collected impermissible deposits, the noncompliance will be
reported to the IRS on Form 8823 under the category "gross rent(s)
exceeds tax credit limits." The noncompliance will be corrected on
January 1st of the next year.
(3) Owners are not required to refund the overcharged
fee amount. To correct the issue, Owners must reduce the application
fee for prospective applicants. Once the fee is reduced for prospective
applicants, the Department will report the affected back in compliance
on January 1st of the year after they were overcharged the application
fee or an impermissible deposit.
(4) Throughout the Affordability Period, Owners may
not charge a deposit or any type of fee (other than an application
fee) for a household to be placed on a waiting list.
(d) Rent or Utility Allowance Violations on MFDL programs,
the amount of rent paid by the household plus an allowance for utilities,
plus any mandatory fees and any rental assistance (unless otherwise
described in the LURA) cannot exceed the designated applicable limit
published by the Department. If it is determined that the Development
collected rent in excess of the allowable limit, the Department will
require the Owner to refund or credit the affected residents the amount
of rent that was overcharged. The Owner must obtain in writing, from
the household, the election to receive a full refund check or to have
the entire overpaid amount credited to their household's account.
In the absence of a household's election, a full refund check must
be presented to the household within thirty days.
(e) Rent or Utility Allowance Violations on HTC Developments
after the Compliance Period, HTC properties for three years after
the LURA is released as a result of a foreclosure or deed in lieu
of foreclosure (as applicable), BOND, and THTF the amount of rent
paid by the household plus an allowance for utilities, plus any mandatory
fees cannot exceed the designated applicable limit published by the
Department. If it is determined that the Development collected rent
in excess of the allowable limit, the Department will require the
Owner to refund or credit the affected residents the amount of rent
that was overcharged. The Owner must obtain in writing, from the household,
the election to receive a full refund check or to have the entire
overpaid amount credited to their household account. In the absence
of a tenant election, a full refund check must be presented to the
household within thirty days.
(f) Trust Account to be established. If the Owner is
required to refund rent under subsection (b) or (d) of this section
and cannot locate the resident, the excess monies must be deposited
into a trust account for the household. If the violation effects multiple
households, the Owner may set up a single account with all of the
unclaimed funds. The account must remain open for the shorter of a
four year period, until all funds are claimed, or the expiration of
the Extended Use Agreement. If funds are not claimed after the required
period, the unclaimed funds must be remitted to the Texas Comptroller
of Public Accounts Unclaimed Property Holder Reporting Section to
be disbursed as required by Texas unclaimed property statutes. All
unclaimed property remissions to the Comptroller must be broken out
by individuals and particular amounts.
(g) Rent Adjustments for HOME, TCAP RF, and HOME-ARP
Developments:
(1) 100% HOME/TCAP-RF/HOME-ARP assisted Developments.
If a household's income exceeds 80% at recertification, the Owner
must charge rent equal to 30% of the household's adjusted income;
(2) HOME/TCAP-RF/HOME-ARP Developments with any Market
Rate Units. If a household's income exceeds 80% at recertification,
the Owner must charge rent equal to the lesser of 30% of the household's
adjusted income or the comparable Market rent; and
(3) HOME/TCAP-RF/HOME-ARP Developments layered with
other Department affordable housing programs. If a household's income
exceeds 80% at recertification, the owner must charge rent equal to
the lesser of 30% of the household's adjusted income or the rent allowable
under the other Program.
(h) Rent Adjustments for HOME-ARP Qualified Populations:
(1) Units restricted for occupancy by Qualifying Populations
with incomes equal to or less than 50% will have rents of 30% of the
adjusted income of the household, with adjustments for number of bedrooms
in the unit.
(2) Units restricted for occupancy by Qualifying Populations
with incomes greater than 50% of median income but at or below 80%
of the median income must pay rent not greater than the rent specified
in 24 CFR §92.252(a), high HOME rent.
(3) Units restricted for occupancy by Qualifying Populations
with incomes greater than 80% of median income will follow the rent
adjustments of subsection (g) of this section.
(i) Employee Occupied Units (HTC and THTF Developments).
IRS Revenue Rulings 92-61, 2004-82 and Chief Counsel Advice Memorandum
POSTN-111812-14 provide guidance on employee occupied units. In general,
employee occupied units are considered facilities reasonably required
for the project(s) and not residential rental units. Since the building's
applicable fraction is calculated using the residential rental units/space
in a building, employee occupied units are taken out of both the numerator
and the denominator.
(j) Owners of HOME, NSP, TCAP-RF, NHTF, and HOME-ARP
must comply with §10.403 of this chapter (relating to Review
of Annual HOME, NSP, TCAP-RF, and National Housing Trust Fund Rents)
which requires annual rent review and approval by the Department's
Asset Management Division or Department-procured vendor. Failure to
do so will result in an Event of Noncompliance.
(k) Owners are not permitted to increase the household
portion of rent more than once during a 12 month period, even if there
are increases in rent limits or decreases in utility allowances, unless
the Unit or household is governed by a federal housing program that
requires such changes or the household transfers to a Unit with additional
Bedrooms. If it is determined that the Development increases rent
more than once in a 12-month period, the Department will require the
Owner to refund or credit the affected household. The Owner must obtain
in writing, from the household, the election to receive a full refund
check or to have the entire overpaid amount credited to their household
account. In the absence of a tenant election, a full refund check
must be presented to the household.
(l) If an Owner is increasing a household's rent $75
or more per month, the Owner is required to provide the household
a 75-day written notice of such increase, unless the Unit or household
is governed by a federal housing program that requires such a change.
If an Owner increases the household's rent more than $75 without providing
a 75-day notice, any amounts in excess of $75 per month must be refunded
or credited to the affected household(s). The Owner must obtain in
writing, from the household, the election to receive a full refund
check or to have the entire overpaid amount credited to their household
account. In absence of a tenant election, a full refund check must
be presented to the household.
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