Ongoing Property Standards and Inspections
The property standards and inspection requirements for HOME and LIHTC differ, and a HOME-LIHTC property must meet the property inspection and property standards requirements of both programs. The PJ is responsible for conducting the property inspections of the HOME-assisted units, and the state allocating agency is responsible for conducting the inspections of the LIHTC-assisted units.
The two agencies should share inspection information. There may be some limited opportunities for the two agencies to coordinate inspection activities; this depends on the project, the number of units in the property, and the unit mix.
HOME Property Standards
For ongoing occupancy inspections by the PJ, HOME requires the property to meet state or local housing codes or standards applicable to the housing, or, in the absence of such local codes, Housing Choice Voucher Program Housing Quality Standards (formerly Section 8 HQS). The applicable HOME property standards are described in Chapter 3.
HOME-assisted units that were built to be accessible for persons with mobility or sensory impairments using the UFAS standard, in order to comply with Section 504, must be maintained to that standard during the affordability period.
Additionally, owners of properties that were constructed prior to 1978 are required to conduct ongoing lead-based paint maintenance. Ongoing maintenance standards are at 24 CFR 35.1355, and include (if the property has not been previously determined to have lead-based paint):
- Visual assessment for deteriorating paint by trained personnel
- Lead hazard reduction of identified surfaces by trained personnel
- Clearance of any completed work by certified risk assessor
- Notification of tenants
Property standards apply to the HOME-assisted units. However, in a property with floating HOME-assisted units, it is prudent to maintain all units in accordance with the applicable property standards since a non-HOME-assisted unit might be designated as HOME-assisted at some later time.
HOME Property Inspections
Under the HOME Program, the frequency with which the PJ must conduct onsite inspections of HOME properties throughout the affordability period is based on the total number of units in a project (not just the HOME-assisted units), as identified in Exhibit 5-2.
Exhibit 5-2: Frequency of HOME Property Inspections
The purpose of the property inspections is to ensure that HOME-assisted units, shared common areas, and the building’s exterior meet the applicable HOME property standards throughout the affordability period.
As part of the onsite monitoring, the PJ must do two things: (1) inspect units to verify compliance with HOME property standards, and (2) review records to verify the accuracy of the annual rent and occupancy reports submitted by owners. Note that the onsite records review is discussed in the following sections.
HOME requires the PJ to inspect the common areas, the building’s exterior, and a “sufficient sample” of HOME-assisted units (not all units in the project). HUD recommends that the PJ inspect 10 to 20 percent of the HOME-assisted units in a project, and a minimum of one unit in every building. If the PJ identifies any problems, it should inspect the remaining HOME-assisted units to ensure that these units comply with established property standards.
HOME also requires that the person or entity conducting the inspections be PJ staff or have a contractual relationship with the PJ to conduct such inspections.
PJs should consider inspecting a greater number than the minimum in the following circumstances:
- The project is financially stressed.
- The property manager has limited experience.
- Development activities were completed more than ten years ago (since projects tend to have more maintenance problems in later years).
LIHTC Property Standards
At a minimum, the LIHTC property standards must meet local health, safety, and building codes; and the Uniform Physical Condition Standards for public housing established by HUD at 24 CFR 5.703. Note that the HUD Uniform Physical Condition Standards do not supersede or pre-empt local health, safety, and building codes. State allocating agencies may impose additional property standard requirements as well.
LIHTC Property Inspections
Under the LIHTC regulations, allocating agencies must inspect:
- All buildings and at least 20 percent of the LIHTC-assisted units in the project by the end of the second calendar year following the year the last building in the project is placed in service. For instance, if the property is placed in service in June 2009, then the allocating agency must inspect it by December 2011.
- After that, all buildings and at least 20 percent of the LIHTC project’s assisted units must be inspected at least once every three years during the compliance and extended use periods.
The LIHTC regulations specify that property owners are required to annually certify that, for the preceding 12-month period, each building in the project was suitable for occupancy, taking into account local health, safety, and building codes. Generally, this certification is based on a review of reports that the owner submits.
Property Inspection Requirements for HOME-LIHTC Properties and Units
Both LIHTC and HOME rules specify a sample of assisted units must be inspected. The LIHTC regulations require a larger sample of LIHTC units be inspected than the sample required by the HOME Program.
Although it may vary from project to project, and may depend on any state-imposed requirements, in most instances, HOME requires properties to be inspected more frequently than the LIHTC program.
Since both the PJ and the state allocating agency have inspection obligations, there may be opportunities for limited coordination that could benefit the PJ. However, at a minimum, the PJ should ask the state to forward copies of inspection reports for all HOME-funded properties to help the PJ identify any potential problem properties.
While the state allocating agency may be willing to use the PJ’s inspection as verification of the tax credit property standards, this would not generally work in reverse because the state LIHTC program’s property inspectors may not have the appropriate training to inspect for compliance with the HOME property standards (local codes or Housing Quality Standards) or the UFAS standard for accessible units, which does not generally apply to LIHTC projects that are not also HOME-funded. PJs also should remember that HOME inspections must be done by a person/entity with direct programmatic relationship to HOME, by employment or agreement. In addition, for most projects, the PJ is required to inspect the property more frequently than the state.
The state allocating agency and the PJ should also be aware that the different units may need a different type of inspection, depending on their designation as HOME-assisted only, LIHTC-assisted only, or both HOME- and LIHTC-assisted. HOME-assisted units must meet the HOME property standards; LIHTC-assisted units must meet the LIHTC property standards; and any units that carry both designations must meet the requirements of both programs. When the HOME requirements are more restrictive, this property standard should be used in these units.
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