HUD relents on some LIHTC/PBV rents

Today's new Public and Indian Housing Notice 2006-16 looks like HUD has partly given in to complaints raised in November over the discovery that the October 2005 final rule on project-based voucher housing apparently overrode PIH Notice 2002-22, thereby cutting the rent amounts owners may claim for some housing that is subsidized both by Sec. 8 project-based vouchers and by low-income housing tax credits (LIHTC).

Today's rule says that for housing receiving both these subsidies, PIH Notice 2002-22 will remain in effect solely for projects that received their written notices of owner selection from their local public housing authorities before Nov. 14, 2005. After that, the new rent caps apply.

Here I have to own up to a mistake I made in the November post I've cited above: I thought the new rule made a change only for projects that receive extra tax credits for being in one of the Qualified Census Tract (QCT) areas of mismatch between incomes and housing costs. I have to admit I misunderstood the Nixon Peabody alert that pointed out the problem. (To read the alert, choose "News & Events," then "Publications," then "Affordable Housing Law Alert," and scroll down to Nov. 14, 2005.)

Based on a contritely thorough reading of relevant regulatory materials, it appears that in fact the October final rule tightened the rent caps in at least these two categories: (1) QCT properties receiving both kinds of subsidies where the formula-derived LIHTC rent is lower than either 110% of local HUD "Fair Market Rent" (FMR), or any applicable HUD exception rent, or rents for comparable nearby market-rate units, and also (2) properties receiving both kinds of subsidies outside QCTs where the LIHTC formula rent is lower than either 110% of FMR or any applicable HUD exception rent.

The October rule appeared to be overriding PIHN 2002-22 and saying properties in these categories had to stick to the formula LIHTC rent even if it was lower than the other two figures. (And from my reading of the Final Rule just now it may not even be clear what becomes of properties where the LIHTC rent exceeds FMR and all units receive project-based voucher subsidies.) If you want to check it yourself, start with the new 24 CFR Secs. 983.301, and 983.304 in the Oct. 13, 2005 Final Rule. Especially the frustratingly backhanded provisions of 983.304(c).

But as of today's rule, this restriction "only" applies to the newest double-subsidized projects, and apparently to all such projects from now on.