Review Resident Selection Plan for Issues Covered in Recent HUD Memos and Notices

If you own or manage an assisted site, you must have a written resident selection plan that incorporates the policies and procedures covering each step of the selection process. It’s important to have a well-written resident selection plan because it can show HUD you’re complying with its rules. Among the first things HUD staffers look for when conducting a management review of your site is that you have a written resident selection plan. Not having a written plan violates HUD rules and lowers your review score.

Your plan must comply with HUD’s eligibility, admission, and screening requirements [HUD Handbook 4350.3, par. 4-4 (A)]. HUD spells out the topics you must include in your plan, as well as other topics it recommends you include.

Since late 2014, through memoranda and housing notices, HUD has identified four additional issues that need to be included in resident selection plans of HUD-assisted sites. Be sure to review the following topics as well as your current resident selection plan to make sure your plan is up-to-date. HUD asks owners to review resident selection plans at least annually to ensure that they reflect current operating practices, program priorities, and HUD requirements [HUD Handbook 4350.3, par. 4-4(E)].

Occupancy Protection for HUD-Assisted Households in Properties with Low-Income Housing Tax Credits

This HUD Memorandum, published on Jan. 12, 2015, and directed to owners who participate in both a HUD-assisted program and the Low-Income Housing Tax Credit program, clarifies that owners may not terminate HUD-assisted tenants who don’t meet LIHTC eligibility guidelines. As a result, owners must add language to their resident selection plans and house rules clarifying that HUD-assisted households at LIHTC properties won’t be terminated if they fail to meet LIHTC income requirements and student eligibility rules.

According to the memo, owners may terminate tenancy only in limited circumstances as prescribed by HUD regulations and by the terms of the lease and must follow HUD and state/local procedures. Termination for reasons other than those permitted by HUD are prohibited. The lease agreement details the grounds for termination of tenancy, which don’t include failure to meet LIHTC requirements, including LIHTC-specific income and student eligibility rules.

If you determine at an annual or interim recertification that the tenant has the ability to pay the full contract rent or market rent, or an assisted household has become over-income and no longer eligible to receive a HUD subsidy, you will terminate the housing assistance. However, in accordance with the lease agreement the tenant retains all other rights under the lease--including the right to occupy the unit.

In some cases owners have offered incentives to HUD-eligible households who become over-income for the LIHTC program or don’t meet another LIHTC requirement to move. Owners may do so as long as the incentives are not paid from Section 8 or FHA project funds. In such cases, owners should first inform tenants in writing that they have the option of remaining in occupancy as HUD-assisted tenants under the terms of their lease, in order to ensure that the choice of moving with incentives is truly voluntary.

Use of Marijuana in Multifamily Assisted Sites

A HUD memorandum published on Dec. 29, 2014, issued notice to owners of federally assisted housing that the use of “medical marijuana” is illegal under federal law even if it’s permitted under state law, and thus as required under the Quality Housing and Work Responsibility Act of 1998 (QHWRA) owners can deny admission or occupancy to any household with a member who the owner determines is using a controlled substance such as marijuana.

Owners should address the use of medical marijuana and recreational marijuana in site policies and procedures. It’s best to set applicants’ expectations in the resident selection plan and to establish specific guidelines in your site’s house rules.

According to the memo, owners may not establish lease provisions or policies that permit occupancy by any member of a household who uses marijuana. Owners must establish policies in their resident selection plans and house rules that allow the termination of tenancy of any household with a member who’s illegally using marijuana or whose marijuana use interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents.

Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity

HUD issued Notice H 2015-01 on Feb. 6, 2015, to increase awareness among Office of Housing program participants of the requirements of the HUD Equal Access Rule for actual or perceived discrimination based on sexual orientation, gender identity, or marital status. HUD followed up on July 13, 2015, with Housing Notice H 2015-06, which details the compliance and enforcement option available to HUD for violations of the rule.

As a result of the rule, no owner or administrator of HUD-assisted housing may inquire about the sexual orientation or gender identity of an applicant or occupant for purposes of determining eligibility. HUD further revised generally applicable definitions at 24 CFR 5.100 as follows:

(a) The term “Family” includes, but is not limited to the following, regardless of actual or perceived sexual orientation, gender identity, or marital status:

     (1) A single person, who may be an elderly person, displaced person, disabled person, near-elderly person, or any other single person; or

     (2) A group of persons residing together and such group includes, but is not limited to:

          (i) A Family with or without children (a child who is temporarily away from home because of placement in foster care is considered a member of the family);

          (ii) An elderly family;

          (iii) A near-elderly family;

          (iv) A disabled family;

          (v) A displaced family; and

          (vi) The remaining member of a tenant family.

(b) The term “gender identity” means actual or perceived gender-related characteristics.

(c) The term “sexual orientation” means homosexuality, heterosexuality, or bisexuality.

Violations of the rule could result in HUD’s determination that the owner has failed to comply with program requirements. HUD may pursue any available remedy, including sanctions, that it determines appropriate to remedy the violation. HUD or a contract administrator may review an owner’s resident selection plan or other policies and procedures to determine if it complies with the Equal Access Rule. In addition, the civil rights review done at the time of the Management and Occupancy Review may include a review to determine if the owner is in compliance with the Equal Access Rule. A review may also include requests for information concerning allegations of noncompliance.

Options for Waiting List Administration for Multifamily Housing Properties

HUD Notice H 2014-16, issued on Nov. 28, 2014, gives guidance on the administration of waiting lists for multifamily sites. It covers opening the waiting list, placing applicants on the waiting list, and outreach. The notice doesn’t mandate any new practices for owners/agents, but rather provides additional options for owners in their waiting list administration to further ensure fair housing compliance.

Application intake. Owners must accommodate persons with disabilities who cannot utilize the owner’s preferred application process, by providing alternative methods of application in-take such as accepting mailed or online applications.

Opening the waiting list. As stated in HUD Handbook 4350.3, paragraph 4-16(B)(2), when an owner agrees to open a site’s waiting list and begins to accept applications, the notice of this action must be announced in a publication likely to be read by potential applicants in the same manner (and if possible, in the same publications) as the notification that the waiting list was closed.

The notifications should be extensive, and the rules for applying and the order in which the applications will be processed should be stated. Advertising and outreach activities must be done in accordance with the applicable fair housing marketing requirements or the HUD-approved Affirmative Fair Housing Marketing Plan. It must also comply with adopting suitable means to assure that the notice reaches eligible individuals with disabilities and those with limited English proficiency.

Multifamily owners must ensure that notices of and communications during all meetings are provided in a manner that is effective for persons with hearing, vision, and other communications-related disabilities consistent with Section 504 of the Rehabilitation Act of 1973 (24 CFR 8.6), and, as applicable, the Americans with Disabilities Act.

Placing applicants on the waiting list. If a lottery or other random choice technique is used to place applicants on the waiting list, preferences the applicant qualifies for must be also noted on the waiting list. Selecting tenants from the waiting list must be done in accordance with HUD Handbook 4350.3, paragraph 4-15(A), which requires that, once unit size and preference is determined, owners must select applicants from the waiting list in chronological order to fill the vacancies.

Advertising. Owners must advertise according to the site’s Affirmative Fair Housing Marketing Plan and target this advertising to groups other than the typical population of the neighborhood in which the property is located while reaching out to applicants who are least likely to apply because they are not the predominant racial or ethnic group in the neighborhood.

All advertising must include the HUD-approved Equal Housing Opportunity logo, slogan, or statement. Further, all advertising depicting persons must depict members of all eligible protected classes, including individuals from both majority and minority groups and both sexes.