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109.04.6-XV. Rental Housing.

AR ADC 109.04.6-XVArkansas Administrative Code

West's Arkansas Administrative Code
Title 109. Development Finance Authority
Division 04. Multi-Family Housing
Rule 6. Compliance Monitoring Policies and Procedures Manual for the Home Program
Ark. Admin. Code 109.04.6-XV
109.04.6-XV. Rental Housing.
HOME requirements for rent and occupancy must be met at project lease-up and throughout the project's affordability period. In addition to meeting HOME rent and occupancy requirement, projects must also maintain property standards and comply with other Federal requirements, such as fair housing laws, lead-based paint, affirmative marketing, etc. There are many different types of eligible property: single-family units, high-rise and garden apartments, or condominium units used for rentals. Projects may contain mixed income units or 100% HOME-assisted units.
Owners of projects that will consist of both HOME-assisted and non-assisted units must determine if the HOME-assisted units will be “fixed” or “floating”. Fixed means that the HOME rent and occupancy requirements apply to specific units throughout the affordability period. Floating unit is a comparable unassisted unit that is substituted when a HOME-assisted unit goes out of compliance (i.e. because of increases in tenant income). The designation of fixed or floating units must be established before any disbursement of HOME funds.
Tenant Eligibility
At initial occupancy, property owners must determine whether prospective tenants of HOME-assisted units qualify as low-income households. Income eligibility is based on anticipated income. When collecting income verification documentation, property owners or managers must consider any likely changes in income. For example, wage statements that reflect overtime earnings and tax returns should be reviewed carefully to identify trends. Tenant eligibility must be determined according to one of three possible definitions of income. ADFA recommends the use of the Section 8 definition of income.
During the on-site review, ADFA staff will look for the following:
1. Tenant's application;
2. Income verification documents (wage statements, interest statements, unemployment compensation statements, Zero Income statements, etc.)
3. A copy of the HOME income limits and other materials necessary to establish the household's eligibility;
4. Occupancy records to determine percentage of units occupied by households earning 80%, 60% and 50% of area median income;
5. Proper HOME rents; and
6. Utility allowances.
Ongoing Monitoring Checklists are attached as Exhibit D.
* Minimum Property Standards:
Activity
Minimum Property Standard to be Met
Tenant- Based Rental Assistance
Section 8 Housing Quality Standards
Acquisition of existing housing (no rehabilitation or construction)
Applicable state or local housing quality standards and code requirements
or
Rehabilitation
If no local standards/codes apply, Section 8 HQS
State and local code requirements and local written rehabilitation standards
or
If no local codes apply, one of the following national model codes: Uniform Building Code (ICBO) National Building Code (BOCA) Standard Building Code (SBCCI)
or
Council of American Building Officials I - or 2 family code (CABO)
or
Minimum property standards at 24 CFR 200.925 or 200.926 (FHA)
and
Accessibility requirements for persons with disabilities where applicable
New Construction
State and local code requirements
or
If no state and local codes apply, one of the following national model codes:
Uniform Building Code (ICBO)
National Building Code (BOCA)
Standard Building Code (SBCCI)
or
Council of American Building Officials I - or 2 family code (CABO)
or
Minimum property standards at 24 CFR 200.925 or 200.926 (FHA)
and
Model Energy Code
and
Accessibility requirements for persons with disabilities where applicable
and
Site and neighborhood standards at 24 CFR 893.6(b)
Rent Requirements
The rents for HOME-assisted units cannot exceed HUD-prescribed maximum HOME rents. To ensure soundness of the project, HUD does not require project owners to reduce rents below the HOME rents in effect at the time of project commitment. Multi-family rental projects have two HOME rent levels: “High HOME rents” and “Low HOME rents”. HUD publishes these rents annually for each county or metropolitan statistical area. Rental amounts are available on HUD's website at www.hud.gov/cpd/home/limits/rent/rentlimt.html. New rents become effective thirty (30) days after HUD publishes the new amounts. Keep in mind, however, that tenants' rents should not be adjusted until their leases are renewed.
The High and Low rents represent the maximum that tenants can pay for rent and utilities combined. These rents also represent the maximum amount from all sources that the owner may receive for HOME-assisted units, including both tenant contribution and Section 8 or HOME-funded rental assistance. There is, however, one exception to this rule. If the project receives Federal or state project-based rental assistance for tenants with incomes at or below 50 percent of area median income, the rent limits from the project-based rental assistance program can be used.
High HOME rents are the lesser of:
(a) The Section 8 Fair Market Rents (FMRs) for existing housing; or
(b) 30 percent of the adjusted income of a family whose annual income equals 65 percent of median income, as published by HUD.
Low HOME rents depend upon the number of units. For properties with five (5) or more HOME-assisted units, at least 20 percent of HOME-assisted units must have rents that are no greater than:
(a) 30 percent of the tenant's monthly adjusted income; or
(b) 30 percent of the annual income of a family whose income equals 50 percent of median income, as published by HUD; or
(c) If a project has a Federal or state project-based rental subsidy and the tenant pays no more than 30 percent of his or her adjusted income toward rent, the maximum rent may be the rent allowed under the project-based rental subsidy program.
The FMRs and HOME High and Low Rents include utility allowances. This means that if the tenant pays utilities, the maximum allowable HOME rents must be reduced accordingly. Utility allowances prepared by the local public housing agency may be used when adjusting rents.
Calculating High HOME Rents
HUD publishes High and Low HOME rents annually. To calculate the High HOME rent, follow these steps:
1. On the rent limit chart provided by HUD, find the row labeled Fair market Rent or “FMR” and follow this row across to the appropriate number of bedrooms for the unit.
2. On the rent limit chart, find the row labeled 65 Percent Rent Limit and follow it to the column for the number of bedrooms in the unit.
3. Determine which of the two rents (the FMR or 65% rent limit) is lower. This is the High HOME rent.
4. Subtract any tenant-paid utilities from the High HOME rent established in step 3. This is the maximum actual rent that can be charged to the tenant.
Calculating Low HOME Rents
To calculate the Low HOME rent:
1. Follow the same steps outlined above except that the 50 Percent Rent Limit figures must be used instead of the 65 Percent Rent Limit figures.
2. If a project receives Federal or stat project-based subsidies and the tenant pays no more than 30 percent of his or her adjusted income for rent, the maximum rent may be the rent allowable under the project-based subsidy program.
3. If the Low HOME rent as calculated above is higher than the High HOME Rent, then the High HOME Rent must be used. This can occur when the High HOME Rent is equal to the FMR and the FMR is lower than the Low HOME Rent.
When leasing mixed-income projects, managers must ensure that a sufficient number of units are leased or held available to meet the low- and very-low income targeting requirements and that rents charged to tenants in HOME-assisted units are within the published High and Low HOME Rent limits.
ADFA staff will compare the HUD-provided High and Low HOME rents and utilities to the actual rents charged for HOME-assisted units.
Current with amendments received through December 15, 2023. Some sections may be more current, see credit for details.
Ark. Admin. Code 109.04.6-XV, AR ADC 109.04.6-XV
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