Key Implications for Property Managers – By Rosemary Lynch
HOTMA, enacted in 2016, aims to streamline and modernize housing assistance programs. Its implementation has introduced significant changes affecting property managers around tenant income calculations, asset limits, and tenant selection processes. HOTMA makes some notable changes and, since the timeline for compliance is fast approaching, now is the time to ensure you and your staff are ready to go come July. As a refresher, here is the timeline set out by HUD.
January 1, 2024: HOTMA’s final rule became effective, initiating a phased approach to compliance.
May 31, 2024: Deadline for owners to update Tenant Selection Plans (TSPs) and Enterprise Income Verification (EIV) policies.
July 1, 2025: Mandatory compliance date for all multifamily housing programs.
As mentioned above, HOTMA changes requirements and calculations that affect how property managers qualify and manage tenants in affordable housing communities. Chief among these changes is a revision to both the definition and calculation for income and assets, impacting eligibility and rent determinations. Additionally, tenant selection plans must now address policies for income determination errors, hardship exemptions, and self-certification of assets under $50,000 and the threshold for deducting medical expenses has increased from 3% to 10% of annual income, with a phased-in relief for existing tenants. Property managers should ensure that their software systems are updated to accommodate HOTMA changes. During the transition, manual calculations may be necessary, and HUD has provided guidance on using the rent override function in TRACS for discrepancies.
In addition to HOTMA, USDA RD’s Section 515 program, vital for providing affordable rural rental housing, has undergone regulatory updates to enhance flexibility and preserve existing housing stock. Effective April 17, 2024, new rules allow property owners to use surplus cash for approved soft debt, facilitating capital improvements and property maintenance. Additionally, the Simple Transfer Pilot Program, which has been extended through December 9, 2025, simplifies the transfer process of Section 515 properties, reducing application requirements and transaction costs. Finally, a pilot initiative to decouple rental assistance now permits the continuation of Section 521 rental assistance even after the maturity of Section 515 loans, ensuring ongoing support for low-income tenants in rural areas.
To navigate these regulatory changes effectively, property managers should take the following steps:
- Review and Update Policies ensuring that TSPs and EIV policies reflect HOTMA requirements and are publicly accessible.
- Educate team members on new income and asset calculation methods and updated tenant selection criteria.
- Ensure your systems can handle the changes and, if necessary, source software providers to implement necessary updates for compliance.
- Engage HUD and USDA RD representatives for guidance and support as necessary.
- Monitor your timelines to meet the compliance deadlines to avoid penalties and ensure seamless operations.
Navigating the evolving landscape of HOTMA and USDA RD 515 compliance can be complex—but you don’t have to do it alone. The California Council for Affordable Housing (CCAH) is here to support property managers and housing professionals with the tools, training, and advocacy needed to implement these changes confidently and correctly. Whether you’re updating your compliance protocols or seeking clarity on the latest regulatory guidance, joining CCAH connects you with a statewide network of experts and peers who are facing the same challenges. Visit californiacouncil.org to become a member or reach out today—let’s navigate these changes together.