LIHTC Admissions, Rents, and Grievance Procedures
To qualify for admission, applicants must fall within the unit’s income limits. This is usually 50% or 60% of the AMI (Area Median Income). In addition, LIHTC owners cannot discriminate against voucher families and must accept Section 8 voucher tenants. Unlike the HUD housing programs, there are no immigration restrictions for admission to LIHTC properties. However, a restriction may apply if the property receives funding from a source outside of the LIHTC program. LIHTC properties must comply with the Fair Housing Act and cannot deny admission based on membership in a protected class.
LIHTC rents are not based on a tenant’s income. Instead, rent is set by the use restriction tied to the unit. This means that a tenant’s rent will not change even if the family’s income significantly increases or decreases. LIHTC rents are calculated to include a utility allowance for tenant-paid utilities.
LIHTC rents are set at 30% of the income of the AMI tied to the unit. This is calculated with an assumed family size of 1.5 persons per bedroom. Many state allocating agencies publish rents for different income categories online. Here is an example of a simple rent calculation:
Mahira and Ana qualified for a tax credit property and moved into a 1-bedroom apartment targeted for 50% AMI. The AMI is $68,300 for a 1-person household and $78,000 for a 2-person household.
The tax credit program assumes a 1.5 person bedroom size. To calculate the income of “1.5 people” the owner will average the AMI of a one person household ($68,300) with the AMI of a two person household ($78,000). The average equals $73,150. Mahira and Ana are in a unit targeted to families that make 50% of the AMI so divide $73, 150 in half which is $36, 575.
Rent is set at 30% of the AMI tied to the unit and 30% of $36, 575 is $10,972.50 (annually). To calculate the monthly rent, divide this number by 12 which equals $914.37. Mahira and Ana’s monthly rent is $914.37.
If a family’s income increases after they move in, the family is not disqualified from staying in the unit-even if the increase is above the unit’s income requirements. In buildings that have a mix of tax credits units and other types of units (such as units that are market rate), the owner must follow the “next available unit rule.” This means that if a tenant in a LIHTC unit’s income increases to more than 140% of the AMI, the next available unit must be rented to someone within the appropriate income level for admission (usually 50-60% of the AMI). However, the tenant with the increased income is still eligible to remain in his/her unit.
LIHTC properties are not required to provide a grievance or appeals procedure when a tenant has a dispute with the property owner or manager. However, state allocating agencies can implement due process requirements. A particular project could also create a right to a grievance procedure by including it in the regulatory agreement.