RED Compliance Basics

RED Compliance’s & IHCDA’s Mission and Values:

• IHCDA’s mission is for every Hoosier to have the opportunity to live in safe, affordable, and good-quality housing in economically stable communities.

• IHCDA believes that growing Indiana’s economy starts at home and strives to provide housing opportunities, promote self-sufficiency, and strengthen communities.

RED Compliance Basics

IHCDA has over 43 programs designed to strengthen Indiana’s communities which include some of the following:

RED Compliance BasicsIHCDA Programs

• Weatherization Assistance Energy Assistance Program• Compliance HOME Program• Lead Grant Program LITCH• Hardest Hit Fund CBDG• Blight Elimination Program Disaster Relief• Production Home Ownership Program• Housing Choice Voucher (HCV) Place-making Indiana• Neighborhood Assist. Program Home Based Rental Assist.• Permanent Supportive Housing Housing First Program

Audit Goals:“Goal of Auditor is to get in and get out”

∗ Files should be complete and consistent∗ All necessary verifications should be present

∗ If incomplete, include explanation or clarification of why it is incomplete

RED Compliance Basics: File Audit Tips

RED Compliance Basics

FILE AUDITS:

Every three years Two Types

Onsite For sites 16 units or more, 20% will be audited and on sites

will be scheduled Two weeks notice given

Desktop Send in files thru secure link

Findings Severe Finding – Return to site and fees for returning Corrections

Audit Preparation

RED Compliance Basics

RE-CERTIFCATIONS:

For initial certifications effective date must be the move-in date of the household. For annual recertifications, this date must be the anniversary date of the move-in, even when dealing with other programs such as Section 8.

Performed yearly at sights but for some sites Re-certifications are waived for 100% tax credit projects and

the Available Unit Rule applies differently Full recerts are not necessary

RED Compliance Basics

FILE MANAGEMENT:

Crucial to every audit Uniform and Consistent Necessary Documentation for a Tenant File

TIC Questionnaire Verification Student Status VAWA

Exceptions: are extended use policy

RED Compliance Basics

FORMS:

IHCDA has forms that must be present in all files unless prior permission from IHCDA is given to use another version of the form is given:

TIC Questionnaire

Responsibility of the site to check for new forms frequently

Website: https://www.in.gov/ihcda/files/Appendix%20D-%20Compliance%20Forms.zip

RED Compliance Basics

TRAININGS:

o Yearly Onsite trainings and Webinars o HOMEo RHTC

o Mandatory Trainingo Sites With consistent and costly errorso 8823 Worthy

RED Compliance Basics

SECTION 8:

• Gross rent do not include any rental assistance payments (tenant-based or project-based) made to the owner to subsidize the tenants’ rent

• The gross rent limit applies only to payments made directly by the tenant.

• The portion of the rent paid by Section 8 households can exceed the tax credit rent limit as long as the owner receives a Section 8 assistance payment on behalf of the household and the rent limit is exceeded due to Section 8 requirements for calculating the household rent portion.

RED Compliance Basics EXTENDED USE POLICY:

Developments that have completed their initial fifteen (15) year compliance period may apply for IHCDA’s Extended Use Policy to have less restrictive compliance requirement

Outlines the inspection and monitoring requirements for each tax credit development once the initial fifteen (15) year Compliance Period has ended

What this means for sites: Annual recertifications require only the completion of the IHCDA “Extended Use

Annual Household and Rent Update Form” (available in Appendix D). This means that income verifications will only be required at initial move-in during the Extended Use Period

The annual monitoring fee will be reduced to $10 per unit, with a minimum fee of $110 and a maximum fee of $2730

The 140%/ Next Available Unit Rule will not apply during the Extended Use Period

RED Compliance Basics

EXTENDED USE POLICY PERKS:

The Vacant Unit Rule will not apply during the Extended Use Period, The Full-time Student Rule will not apply during the Extended Use Period File monitoring will occur once every five (5) years, Physical inspections will continue once every three (3) years, Projects that did not elect to be treated as “Multiple Building Projects”

on form 8609 during the first fifteen (15) years will automatically be treated as multiple building projects during the Extended Use Period.

Rental housing developments must participate in the Affordable Housing Database, www.indianahousingnow.org.

RED Compliance Basics

NON-COMPLIANCE:

There has been a change in the Applicable Fraction or Eligible Basis The building no longer meets the Minimum Set-Aside requirements of There is failure to submit the annual utility allowance documentation,

Owner Certification, tenant events, or compliance monitoring fees, An ineligible household resides in a RHTC unit; or A unit or building is no longer suitable for occupancy or otherwise in

violation of physical inspection criteria: or The owner does not comply with requests to conduct a physical

inspection or file monitoring.

NON-COMPLIANCE CONSEQUENCES

∗ 1. Additional fees paid to IHCDA;∗ 2. Recapture of the accelerated portion of the credit for prior years;∗ 3. Disallowance/loss of the credit for the entire year in which the

noncompliance occurs;∗ 4. Assessment of interest for the recapture year and previous years;∗ 5. Notification to the IRS via Form 8823;∗ 6. Negative points on any subsequent RHTC reservation applications;∗ 7. Rejection of future applications (suspension or debarment);∗ 8. Repayment of rent overages;∗ 9. Mandatory attendance at an IHCDA sponsored compliance training; and/or∗ 10. An increase in the frequency of IHCDA audits/inspections.

RED Compliance Basics

8823 and IRS

IHCDA will notify IRS of Noncompliance IHCDA will notify the IRS of instances of potential noncompliance by issuing Form 8823,

Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition.

RED Compliance Basics

RED Compliance Basics

FEES:o File Audito Annual Owners Certificationo Utility Allowanceso Modificationso Returning to site for failed file audit

o Late Feeso Annual Owners – double the priceo File Audits

o Request for more timeo Late submissions

RED Compliance Basics TENANT GUIDES:

https://www.in.gov/ihcda/files/Appendix_L-_Tenant_Guides.zip https://www.in.gov/ihcda/4273.htm

Both Federal and RHTC Programs Manuals Tenant Guide to Section 42 Rent Limits HUD Handbook Fair Housing VAWA Forms

RED Compliance Basics UTILITY ALLOWANCES :

Deadlines Three Kinds Utility allowances

HUD Utility Energy Consumption (approved contractor only) Qualified Engineering (approved contractor only)

Requests (UA) Required paperwork

What is needed (what site is asking for) Back up paperwork

Fees Paid up front

RED Compliance Basics

IHCDA ONLINE: https://online.ihcda.in.gov/

30 Day After event - Deadline Annual Owner Certifications File Audits Changing your password

https://www.in.gov/myihcda/files/Changing%20your%20password%20IHCDA%20Online.pps

Sign Ons Training Videos https://www.in.gov/myihcda/files/Online%20Reporting%20Training.pps

RED Compliance Basics

ANNUAL OWNERS CERTIFICATIONS:a) Every Yearb) Question and Answer Sessionc) DON’T WAIT TILL LAST MINUTEd) Finalizing

a) Uploading Paperworkb) Finalizing Year – Important

e) Shelter and Migrant Housing Reporting Different reporting criteria a) https://www.in.gov/ihcda/files/Shelter%20and%20Migrant%20Farmer%20Housing%20Annual%20Bene

ficiary%20Report.xls

RED Compliance Basics

RED NOTICES & COMPLIANCE NEWSLETTER:

• Helpful Information• Up-Coming Training and useful deadline dates• RED Notices

• Website: https://www.in.gov/ihcda/4054.htm

IMPORTANT LINKS

∗ VAWA Forms ∗ VAWA Forms

∗ HUD HANDBOOK 4350.3∗ hud handbook

∗ Compliance Forms∗ Forms

RED Compliance Basics

Rent and Income Limits

∗ Tax Credit Rent and Income Limits∗ Rent limits change every year∗ Both Federal and Tax Credit Limits are on IHCDA Web site∗ Arranged By:

∗ County, ∗ Percentage, ∗ Number of People and∗ Yearly Income

RED Compliance Basics

RED Compliance Basics

AUDITORS:

Ryan Splinchal – Northeast RegionGanee Natschke – Southwest RegionCindy Cox – Southeast RegionStacey Norman - Northwest RegionAnita Smith – Close Outs Devyn Smith – Compliance Director