Sunday, August 28, 2011

One Oregon Example, HUD FY 2012 Fair Market Rents Will be LOWER than LIHTC Allowable Rents.

I thought it might be useful to compare HUD FY 2012 proposed FMR's to allowable Low Income Housing Tax Credit rents for an Oregon area with a substantial decreased in FMR's, so I chose Hood River County, which is slated for a 21.1% decrease in their 2 BR FMR.   

Using the formula for conversion of LIHTC income to LIHTC bedroom size formula that I snipped from HUD website (see first image pasted below), I prepared the table below (see second image) showing how HUD FMR's for FY 2012 would compare to the current LIHTC rent limits for Hood River County.

Two observations:
  1. Except for 3 and 4 bedroom LIHTC units reserved for families at incomes of 50% or below, ALL Hood River LIHTC allowable rents are HIGHER than the HUD proposed FY 2012 Fair Market Rents.
  2. LIHTC owners are required to rent to voucher holders, but NOT at a discount. IF the LIHTC allowable rent is at street rent levels this would mean that LIHTC owners could refuse voucher tenants unless the PHA authorized a higher exception rent (or the family makes up 100% of the difference between FMR and street rent). Granting higher exception rents would reduce the number of families that could be served with voucher funding at the new FMR's; paying higher rents than 30% of income defeats the affordability purpose of the voucher program. 
  3. These FMR to LIHTC rent relationships may change when HUD publishes new income limits.  If incomes go up, this would only increase the gap between HUD FMR's and LIHTC allowable rents.
If anyone has any additional insights on the impact of proposed FMR's on LIHTC rents and LIHTC projects I ENCOURAGE YOU to add observations below this post or drop me an email. [I am by no means a LIHTC expert]. Ditto if there are calculation issues that you see.

Originally created and posted on the Oregon Housing Blog

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