Recruiting and Selecting Tenants

Both the HOME and LIHTC programs impose certain requirements related to fair housing, marketing (the recruitment of tenants), and tenant selection policies and procedures. In addition, HOME requires PJs to approve marketing and tenant selection procedures. HOME also imposes affirmative marketing requirements to projects with five or more HOME-assisted units. When combining these sources of funds, the requirements of both programs must be met.

Fair Housing

Both HOME and tax credit projects are subject to the Federal Fair Housing Act. This means that property managers of HOME- and LIHTC-assisted housing are prohibited from discriminating on the basis of race, color, religion, sex, familial status, national origin, and disability, in all aspects of the rental housing program administration and management. Owners and managers cannot discriminate in the leasing of units, in establishing terms and conditions of property rentals, or in advertising the availability of rental housing units. Additional state and local fair housing laws may also apply.

Marketing

Owners of HOME- and LIHTC-assisted rental housing and their property managers must conduct marketing and advertising activities in accordance with applicable fair housing laws. HOME imposes additional requirements related to affirmative marketing of HOME-assisted units; and additional marketing restrictions on units that are accessible in accordance with the requirements of Section 504. These additional requirements apply to projects that are funded with both HOME and LIHTC.

Affirmative Marketing

PJs must develop affirmative marketing procedures for properties with five or more HOME-assisted units. Affirmative marketing procedures ensure that special outreach and advertising efforts are made to communicate the availability of HOME-assisted housing to those groups or individuals who might otherwise be unlikely to apply for it. Affirmative marketing should be made part of the property’s overall marketing activities. Generally, PJs require owners and managers to propose affirmative marketing procedures as part of written marketing and tenant selection procedures for the project.

Marketing Accessible Units

Property managers of properties with accessible units that are built in accordance with Section 504 requirements must develop procedures to ensure that information regarding the availability of accessible units reaches eligible individuals with disabilities. Reasonable, nondiscriminatory steps must be taken to make sure that available, accessible units are offered:

  • First, to a current occupant of the property who might require or benefit from the accessibility feature(s) of the unit
  • Second, to an eligible qualified applicant on the waiting list who requires the accessibility feature(s) of the unit
  • Last, to a nondisabled person on the waiting list.

A nondisabled tenant may rent an accessible unit only when the property manager has made all reasonable efforts to attract a tenant with a disability, and has followed the above steps.

Tenant Selection

Although LIHTC does not have any specific requirements about tenant selection, under HOME, the owner must establish written tenant selection procedures (see 24 CFR 92.253(d)). These procedures describe the methods and procedures for taking applications and screening tenants for any HOME-assisted property, including HOME-LIHTC properties. The PJ should be sure that the procedures for a HOME-LIHTC project clearly describe the income restriction requirements that apply to the project.

Preferences for Tenants with Special Needs

The HOME and LIHTC programs have different approaches and requirements related to developing special needs housing. In some instances, in order to comply with the requirements of both programs, it may not be possible to designate a single unit as both HOME- and LIHTC-assisted.

Under the HOME Program, in certain circumstances, the PJ can authorize a property owner to give preference in the tenant selection process to persons with special needs, such as the elderly or persons with disabilities. The PJ must state this preference in its Consolidated Plan, document that the special needs group getting preference has an unmet housing need, and demonstrate that the preference is necessary to narrow the gaps in benefits and services to the special needs group.

However, PJs cannot permit owners and managers to limit the assisted housing to persons with a specific type of disability. Although HOME funds can be used to assist housing that gives a preference to persons with disabilities, civil rights laws (which confer certain protections on persons with disabilities) in most cases prohibit owners from discriminating based upon the nature of a disability. Consequently, HOME-assisted housing for persons with disabilities must be equally available to all persons with disabilities. Property managers may offer and advertise nonmandatory services that may be appropriate for persons with a particular special need or disability.6

The LIHTC program rules do not impose these same restrictions on serving special needs groups. In fact, the state allocating agency may require that a certain number of units are “set aside” for a specific population. It is not uncommon for an owner to receive bonus points on its tax credit application for setting aside units for a specific population. The state identifies these types of preferences and requirements in its QAP.

For a tax credit project that has certain special needs set-asides, the tenant selection policies must clearly state these preferences, and these units must be marketed and occupied by persons who meet the state’s criteria. LIHTC rules require these set-aside units to remain vacant until an eligible tenant is found.

It is difficult in most situations to comply with the HOME and LIHTC rules in implementing any LIHTC-imposed special needs preference, particularly if the preference is for tenants with a specific type of disability. As a general rule, LIHTC set-aside units should not be combined as both HOME- and LIHTC-assisted units.



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