CHAPTER 2 

MULTIFAMILY PROPERTY REQUIREMENTS 

When owners purchase an AHP property, they agree to 

follow a set of requirements designed to assure that the 

property provides affordable housing for low income 

families, an obligation established when the LURA is 

signed and recorded at closing. 

The role of state monitoring agencies is to check a 

property's occupancy status periodically to assess 

whether the owner is complying with the program's 

requirements. If an owner fails to follow the required 

procedures, the agency must take enforcement actions to 

compel the owner to bring the property into compliance. 

It is essential that owners understand the requirements 

that apply to the program. This chapter describes these 

requirements, which fall into eight basic areas: 

0 Occupancy Requirements; 

0 Tenant Eligibility; 

0 Maximum Rents; 

0 Dwelling Lease Requirements; 

0 Leasing Procedures when Insufficient Qualifying 

Units; 

0 Record-Keeping and Reporting Requirements; 

0 Monitoring Fees; and 

0 Resale Requirements. 

2.1 OCCUPANCY REQUIREMENTS 

The LURA requires an owner to lease a specified portion 

of the units in the property to low income tenants, and to 

maintain the required units over the life of the LURA. 

A. Low Income Unit Requirements 

Under most circumstances, an owner of an AHP property 

must meet two specific low income unit requirements: 

¤ a Total Set-Aside; and 
 

 

¤ a Very Low Income (VLI) Set-Aside . 2 

The VLI Set-Aside is part of the Total Set-Aside. Units 

that qualify for the VLI Set-Aside also count toward the 

Total Set-Aside obligation. Exhibit 2-1 illustrates this 

relationship between the two set-asides. 

VLI 

Set-Aside 

(20%) 

Unrestricted 

Units (65%) Total 

Set-Aside 

(35%) 

Units that are designated or reserved to meet these SetAsides are subject to all of the occupancy requirements 

contained in this Manual. Units that are not counted 

toward the Set-Asides are referred to as “ unrestricted 

units” , and are not subject to the requirements of this 

Chapter unless and until they are needed to replace units 

in the Set-Asides as described in Chapter 3. 

Total Set-Aside 

The Total Set-Aside specifies the portion of the total units 

in the property that must be designated for occupancy by 

low income tenants. 

For some properties, such as some bulk sale condominiums, no VLI Set-Aside was established because the 

units were expected to be resold to individual LI buyers. If a property’s LURA established no VLI Set-Aside, then 

owners are only required to designate LI tenants and charge LI rents as provided herein, and the requirements for 

VLI do not apply. 

AHP Owner’s Compliance Manual 2-2 9/97 

2 
 

 

 

 

 

To qualify as a Low Income tenant, a household's annual 

(gross) income must not exceed 80 percent of the median 

income for that area after adjusting for family size. These 

income limits are defined annually by HUD, and 

distributed 

by FDIC and your monitoring agency. (Section 2.2 

discusses in greater detail income eligibility and how 

annual (gross) income for a household is defined.) 

Generally, the Total Set-Aside is set at 35 percent of the 

total units in the property. However, in some cases 

higher set-asides were negotiated and the number of units 

that 

must be kept available for low income families can range 

from 35 percent up to 100 percent of the units.3 The Total 

Set-Aside established for a given property is found in 

Section 2.2 (a) of its LURA, and is specified as an actual 

number of units rather than percentages. 

Very Low Income (VLI) Set-Aside 

The VLI Set-Aside establishes the number of units in a 

property that the owner must designate for occupancy by 

Very Low Income tenants. 

A Very Low Income household must have an annual 

(gross) income equal to or less than 50 percent of the 

area median income after adjusting for family size, as 

defined by HUD and the FDIC. 

The VLI Set-Aside for a specific property can be found in

 the same paragraph of the LURA as the Total Set-Aside, 

section 2.2(a). For most properties, the VLI Set-Aside is 

20 percent of the total units in the property. 4 VLI units 

also count toward the Total Set-Aside. 

For purposes of this Manual, all examples will be provided 

using the above Program standards of a 35 percent Total 

Set-Aside, including a 20 percent Very Low Income Set3 For bulk purchases of AHP properties, the 35 percent minimum Total Set-Aside applies to the entire 

purchase. Individual properties within the purchase may have a Total Set-Aside less than 35 percent as long as the 

set-asides established for the other properties bring the purchase up to the 35 percent minimum. 

4 In general, the required number of VLI units represents roughly 60 percent of the Total Set-Aside because 

that was the proportion established by the final rule for the program. In some cases however, the negotiations for 

higher unit requirements resulted in VLI Set-Aside that make up a larger or smaller share of the total Low Income 

units. These cases occurred primarily in bulk purchases where the owners are aggregating units among certain 

properties within the purchase. While the VLI units for the entire purchase represent roughly three-fifths of the Low 

Income units, the share of VLI-QUs for a given property in the purchase may vary. 

AHP Owner’s Compliance Manual 2-3 9/97 
 

 

Aside. Refer to the LURA for your property to identify the 

exact requirements for your property. 

Proportionality 

In addition to achieving a total number of QUs to meet the 

required Set-Asides, owners are required to use best 

efforts to achieve and maintain a reasonable distribution 

of the QUs throughout the property. Section 2.2 of the 

LURA requires owners to use best efforts to achieve and 

maintain a distribution of QUs across unit sizes in 

proportion to the overall distribution of units . (For 

example, if 40 percent of the units are 1 BRs, 40% are 2 

BRs, and 20% are 3 BRs, then the owners should attempt

 to maintain over time a 40/40/20 distribution of QUs 

across the three sizes.) It also requires owners to avoid 

physical concentrations of QUs, instead asking owners to 

keep 

QUs physically distributed throughout the property. 

This is a best efforts clause, since the FDIC recognizes 

that market conditions and unit turnover make it 

impossible to always maintain an exact distribution. 

Owners should monitor the distribution of their QUs units, 

and make efforts to rebalance the distribution of unit sizes 

and disperse units when turnover opportunities permit. 

B. Designating Qualifying Units (QUs) 

Owners need to designate the units within the property 

that they have chosen to fulfill the set-asides. The units 

occupied by Very Low Income tenants that the owner 

counts toward meeting the VLI Set-Aside are called Very 

Low Income Qualifying Units (VLI-QUs). When these 

units are added to the units occupied by low income 

residents -- designated as Low Income Qualifying Units 

(LI-QUs), the sum should equal the number of units 

required by the Total Set-Aside.5 

For example, an owner who purchased a 60 unit rental 

property with a 21 unit Total Set-Aside (35 percent of 60 

units) would have to rent at least 12 units (20 percent of 

60 units) to Very Low Income households to meet the VLI 

5

 Low and Very Low Income families may occupy unrestricted units in the property. A unit with a low income 

tenant only becomes a qualifying unit if the owner takes the steps necessary to designate it as one. 

AHP Owner’s Compliance Manual 2-4 9/97 
Set-Aside. These 12 units would also count toward a 

Total Set-Aside requirement. 

An owner must meet both Set-Aside requirements, not 

just one, to be in compliance with the occupancy 

requirements. 

Note: Not all units occupied by Low income and Very 

Low Income tenants must be designated as Qualifying 

Units. Only the minimum required by the Set-Asides 

must be designated. Low and Very Low Income tenants 

may occupy unrestricted units in the property. 

There are two principal methods owners can use to 

designate QUs. They can: 

0	 lease vacant units to income eligible tenants; 

and/or 

0	 identify existing tenants who are income eligible. 

Owners may use one or both of these approaches to 

obtain the required number of QUs. Section 3.4 of this 

manual describes each method in greater detail. 

C. Vacated QUs 

When a tenant moves out of a QU and the property is 

below the required Set Asides, the owner must reserve 

and rent this unit (or another unit) to a qualifying tenant to 

meet the Set Aside requirements. 

While the owner is seeking a replacement tenant, the 

vacated unit retains the pre-vacancy QU designation (VLI 

or LI) until the unit or replacement unit has been occupied 

by a new Qualifying tenant. Once the unit is rented or a 

replacement unit is found, the unit must be occupied by a 

Qualified Household to retain its designation as a QU. 

(See Section 3.5 for a description of procedures for 

renting or replacing vacant QUs.) 

D. Shifting the QU Designation 

A QU designation is not permanently tied to a given unit. 

However, when an owner designates a unit as a QU, that 

unit must remain a QU as long as the tenant who 

occupies the unit remains eligible (as determined by an 

annual reAHP Owner’s Compliance Manual 2-5 9/97 
 

 

 

certification) and continues to reside there. For example, 

if Unit 201 was designated as a LI-QU based on the 

income of Household X, the owner may not remove the 

QU designation from Unit 201 until Household X is 

determined to be over-income or moves out. 

Furthermore, when the Qualifying Tenant of a QU moves 

to another unit within the property, the QU designation 

must be shifted to the new unit occupied by the tenant.6 

Using the example above, if Household X is income 

eligible and moves from Unit 201 to Unit 101, the LI-QU 

designation shifts to Unit 101 and the owner may rent Unit 

201 to any tenant (assuming all Set-Aside requirements 

are met). 

Section 3.5 of this manual provides further information on 

changing QU designations. 

E.	 Treatment of In-Place Tenants 

One of the most important provisions of AHP is the 

protection for in-place tenants . The procedures for 

reaching the occupancy requirements for a property are 

designed to allow owners to lease QUs as existing units 

become available. Under no circumstances should an 

owner terminate the occupancy of any tenant in-place 

at the time the LURA became effective solely for the 

purpose of achieving compliance with the property's 

occupancy requirements. In-place tenants enjoy this 

protection for as long as they reside in the property. 

2.2	 TENANT ELIGIBILITY AND LEASE 

REQUIREMENTS 

Before a unit can be designated as a QU, the owner must 

establish that the tenant is a Low or Very Low Income 

household. To determine a household's income status, 

the owner must compare the household's annual income 

to the income limits for Low and Very Low Income 

tenants, as published annually for your area by HUD and 

FDIC. To help assure that a tenant's eligibility is 

established properly, owners must verify the household's 

income and have the tenant certify its accuracy on the 

AHP Tenant Income Certification (TIC). These 

If a tenant of a QU stays in the development, that tenant remains eligible until the household's annual 

income exceeds 140 percent of the Low Income limit (see Section 2.2.H). 

AHP Owner’s Compliance Manual 2-6 9/97 

6 
requirements are summarized below, and explained in 

detail in Chapter 4. 

Because income and household composition may change 

over time, the owner must re-examine the eligibility of 

tenants in QUs at least once a year. Recertification 

requirements are covered in Section 4.7. 

Finally, to assist and protect the owner in determining 

eligibility and completing the re-examination process, the 

owner must incorporate specific provisions into the lease 

agreement for each QU that establish the tenant's 

obligation to provide accurate information regarding 

household income and composition. These requirements 

are covered in Chapter 5. 

The steps described below apply only to the households 

that are to be certified for a QU. These requirements do 

not apply to any unrestricted unit which is not part of the 

Set-Aside for QUs. 

A. Establish the AHP Income Limits 

The FDIC establishes the income limits owners must use 

in determining whether a household qualifies as a Low or 

Very Low Income tenant. The FDIC has adopted HUD's 

definitions of Low Income and Very Low Income 

respectively as the basis for these limits in AHP. 

For most areas of the country, Low Income and Very Low 

Income are calculated as 80 percent and 50 percent of 

area median income with an adjustment for family size. 

However, there are some areas of particularly high or low 

median income where HUD adjusts the calculations of 

Low and Very Low Income. The FDIC uses HUD's 

published income limits, and these will be provided 

annually by the monitoring agency. 

Owners should use only those income limits provided by 

the monitoring agency. Census Bureau and other 

definitions of median income are not appropriate 

surrogates for AHP's published limits. 

When the AHP income limits are received from the 

monitoring agency, there may be listings for multiple 

communities in the state. Owners should identify the 

limits that apply to your property based upon the location 

of the 

AHP Owner’s Compliance Manual 2-7 9/97 
 

property. Owners do not need to apply 50 percent or 80 

percent factors to calculate the income limits. These are 

already computed on the sheets provided by the 

monitoring agency. There are no mathematical 

calculations required. 

Units occupied by tenants with annual (gross) incomes at 

or below these limits may be designated as QUs. For 

example, a unit occupied by a tenant with an annual 

(gross) household income equal to 60 percent of the area 

median income for families of the same size could be 

designated as a LI-QU. 

When determining eligibility, owners must use the income 

limits in effect on the date the tenant is certified as income 

eligible. Monitoring agencies will provide owners with 

copies of the current income limits as they are updated. 

B. Determine Household Size 

Because income limits vary by size of household, owners 

must establish the number of people in a tenant's 

household to determine whether that household is income 

eligible. Section 4.2 of this manual provides further 

information on determining household size. AHP is only 

concerned about household size in terms of income 

eligibility. Unlike many HUD programs, AHP does not 

dictate the size unit for which a household is eligible. 

C. Determine Income Eligibility 

To determine whether a tenant is eligible, an owner must 

compare the tenant's anticipated annual (gross) income 

for the next 12 months to the income limits (as noted 

above) for the appropriate household size. 

AHP uses the definition of annual household income as 

defined by HUD to determine the gross annual (or 

eligibility) income of families and individuals receiving 

housing assistance through the Section 8 program, except 

as the FDIC has specifically defined income for student 

households (see Appendix C). 7 

7 Special rules have been developed for student households in AHP. Scholarships or educational grants 

for tuition and school expenses may be excluded, as can student loans, but the portions of scholarships or grants 

for subsistence plus any payments from any other persons (such as parents or family members) must be included 

as income. 

AHP Owner’s Compliance Manual 2-8 9/97 
 

Under this definition, household annual income includes 

employment or earned income of all adult members, most 

benefits and periodic payments, and income from assets.

 The sources of income that must be included and 

excluded are detailed in Chapter 4 and the AHP "Guide 

for Determining Annual Income" in Appendix C. 

Any changes which HUD makes to the Section 8 Program 

regarding income definitions may be incorporated 

automatically into AHP by the state monitoring agencies to 

maintain consistency across programs. The exception is 

revision of the AHP definition of student household 

income, which may be changed only through direct 

issuance by the FDIC. As HUD publishes updates to 

these requirements, monitoring agencies will inform 

owners of the changes. 

FDIC has developed a sample rental application that 

owners may use to collect the information needed to 

calculate annual income. This form should aid in 

determining applicant eligibility and is included in 

Appendix A of this manual. If you wish to use a different 

application format, make certain that all required income 

elements, including assets, are incorporated into the 

application, and it is recommended that you ask the State 

Monitoring Agency to review the form. 

D. Execute Tenant Release and Consent Form 

To help owners retrieve the required eligibility information, 

the LURA specifies that the household head and other 

appropriate members of the household execute a 

monitoring agency approved Release and Consent Form 

(see Appendix B). When seeking Qualified Tenants, 

owners should have all prospective tenants who appear to 

be eligible sign this form. This is required by law. 

The form authorizes the following parties to 

furnish/release information needed to evaluate household 

eligibility: 

0 depository institutions; 

0 private sources of income; and 

0 any federal, state, or local agency. 

Use or disclosure of information obtained from a 

household or another source pursuant to the Release and 

AHP Owner’s Compliance Manual 2-9 9/97 
Consent Form must be limited specifically to the purpose 

of determining tenant eligibility to occupy a QU. 

E. Verify Tenant Income 

If the anticipated annual income of a prospective or 

existing tenant appears to fall under the applicable income 

limits (by household size), the next step is for the 

owner/manager to verify that the income information 

provided by the tenant is accurate. 

The verification procedures for AHP properties follow 

methods quite similar to those used in other affordable 

housing programs, such as the Low Income Housing Tax 

Credit, tax-exempt bond, mortgage revenue bond, and 

HUD-assisted housing programs. 

There are three acceptable methods of verifying 

household income: 

¤	 Third-party written verifications are the preferred 

method. The owner must attempt to use this method 

wherever feasible. However, tenants who are selfemployed are one example where this method may 

not be feasible. 

¤	 First-hand documentation should be used in cases 

where third-party verification is not feasible. Examples 

of acceptable forms of firsthand documentation 

include: pay check stubs, W-2 forms, certified tax 

returns, and bank statements. 

¤	 Third-party oral verification may be used when there 

is no response to the owner’s request for written 

verification. Owners must document information that 

is provided orally in the tenant file with signed and 

dated notes. Oral verifications also may be used to 

update written verifications. 

These verification methods must be used to document all 

income reported, including all assets when the total assets 

exceed $5,000. When assets are less than $5,000, the 

asset information is not required to be verified (but asset 

income is included in the income calculation, and all other 

information still must be verified.) 

AHP Owner’s Compliance Manual 2-10 9/97 
Section 4.4 provides more detailed information on 

acceptable verification procedures. 

F. Execute Tenant Income Certifications 

Upon verification of eligible income and prior to 

designation of the unit as a QU, owners must have 

tenants of QUs sign a written certification that the 

information they provided regarding their income and 

household composition is complete and accurate. 

Owners must use the Tenant Income Certification (TIC) 

Form included in Appendix E, or a comparable form 

approved by the State Monitoring Agency. The TIC 

consists of: 

¤	 Part I -- household composition and tenant income 

verified by the owner or manager; 

¤	 Part II -- tenant certification of the accuracy of the 

information shown in Part I; 

¤	 Part III -- owner or manager signature and the 

household’s designation (Low Income or Very Low 

Income); and 

¤	 Part IV -- relevant dates, rents and rent limits, and 

income limits as of the time of execution. 

The verification of income and completion of the TIC Form 

must be performed prior to occupancy. Execution of the 

TIC at the same time as the lease is executed is 

recommended. 

G. Execute the Tenant Lease Provisions 

The LURA requires that leases with tenants occupying 

QUs contain certain provisions establishing the obligations 

of their tenancy. Leases for all QUs must require tenants 

to: 

0	 provide information regarding household size and 

annual income; and 

0	 certify the accuracy of this information. 

AHP Owner’s Compliance Manual 2-11 9/97 
 

 

These lease requirements can be incorporated through a 

lease addendum rather than executing a new lease. AHP 

does not specify required lease terms. The specific 

provisions (and some prohibited clauses) are discussed in 

Chapter 5. 

H. Re-examine Tenant Income Annually 

On at least an annual cycle, owners must re-examine the 

eligibility of tenants living in QUs. During each reexamination, owners must gather and verify information 

on changes in household composition or the annual 

income of the tenant. 

Conducting Re-Examinations 

In conducting re-examinations, owners must have the 

tenant of each QU report any changes in household size 

or annual income. 

Even if no changes have taken place, tenants still must 

provide information showing that their status remains the 

same. Tenants then must certify the accuracy of the 

information provided. 

In assessing the ongoing eligibility of tenants, the 

applicable VLI limit is used to determine eligibility of VLI 

tenants. However, the income limit used to determine 

eligibility as a Low Income tenant is set at 140 percent of 

the applicable LI income limit. Chapter 4 of the AHP 

Owner's Compliance Manual describes how to calculate 

the recertification limit. 

The chart below shows the relationship between income 

and recertification limits. 

Income Limits

 Initial Recertification

 Certification

 Very Low Income 50% 50%

 Low Income 80% 140% of 80% 

AHP Owner’s Compliance Manual 2-12 9/97 
When conducting a re-examination, owners must execute 

a TIC Form (see Appendix E), but mark the recertification 

box. As with initial certifications, all income information 

must be verified following the methods in Section 4.5, 

even if no change occurred. 

The re-examination must be completed no later than the 

recertification date for the unit. It is recommended 

generally that the anniversary of the effective date of the 

tenant's lease serve as the standard recertification date. 

However, owners may establish different recertification 

dates as long as the re-examination is completed within 

12 months of the initial certification or the most recent 

recertification. 

Changes in QU Status 

Once the recertification has been obtained, owners must 

assess whether the status of the QU has changed. For 

example, if the recertified income of a tenant living in a 

VLI-QU now exceeds the VLI limit, the status of the QU 

has changed. 

When an owner re-examines tenant eligibility there are 

three ways the status of a QU may change: 

¤	 VLI/LI-QU Becomes Over-Income Unit. If the 

recertified income of a tenant in a QU (VLI or LI) 

exceeds 140 percent of the applicable LI limit, the 

owner must use the special Over-Income Qualifying 

Unit (OI-QU) designation until the unit is properly 

replaced with a VLI-QU or LI-QU (see Section 3.5), 

and the rent may be adjusted to a market rent. 

¤	 VLI-QU Becomes LI-QU. If the recertified income of 

a tenant in a VLI-QU exceeds the applicable VLI limit 

but remains within the LI limit for QU tenants (140 

percent of LI limit), the owner must re-designate the 

unit as a LI-QU, and the LI rent limit (as described in 

Section 2.3 below) can be applied. 

¤	 LI-QU Becomes VLI-QU. If the recertified income of a 

tenant in a LI-QU falls within the VLI Limit, the owner 

must re-designate the unit as a VLI-QU, and the VLI 

rent limit (as described below) must be applied. 

AHP Owner’s Compliance Manual 2-13 9/97 
2.3 MAXIMUM RENTS 

To assure that Set-Aside units are affordable to Low and 

Very Low Income households, the LURA establishes the 

maximum rents that owners can charge for these units. 

The rent limits are set at levels affordable to Low and Very 

Low Income households based on the median income for 

the area in which the property is located. The rent limits 

for each type of QU will vary by unit size. See Chapter 5 

of this manual for further information. 

The rent limits are determined as follows: 

¤ LI Rent Limit. Rents for LI-QUs must not exceed 30 

percent of the adjusted income of a family whose 

income equals 65 percent of the area median (based 

on the adjustments set forth in the LURA) with 

adjustment for family size. 

¤ VLI Rent Limit. Rents for VLI-QUs must not exceed 

30 percent of the adjusted income of a family whose 

income equals 50 percent of the area median (based 

on the adjustments set forth in the LURA) with 

adjustment for family size. 

These rent limits are determined annually based upon 

median income calculations of HUD, and are distributed 

simultaneously with new income limits by your monitoring 

agency. 

These maximum rents are not adjusted for tenant-paid 

utilities, and any additional service charges to tenants 

over and above basic shelter rent are permissible only to 

the extent that they are customary in the local market, are 

charged to all tenants. The monitoring agency will review 

to determine that additional charges meet these 

standards. 

Since the rent limits are calculated based upon local 

incomes, and not local market rents, they may vary from 

prevailing market rents. They are the maximum an owner 

may charge tenants for contract rent. Owners may need 

to charge less based upon local market conditions in order 

to maintain full occupancy. 

AHP Owner’s Compliance Manual 2-14 9/97 
2.4	 REACHING AND MAINTAINING THE SETASIDES 

The Set-Aside requirements apply to the full compliance 

period, which can be 40 years or more. An owner’s goal 

should be to achieve and maintain the required Set-Aside 

of QUs throughout the compliance period. However, it is 

often the case that a newly purchased property will not 

meet the applicable Total and VLI Set-Asides. The 

properties are considered to be in the “ Pre-Compliance” 

stage, and owners and their managers need to follow 

specific procedures to obtain the necessary number LI 

and VLI units as described in Section 3.4. Owners have 

the flexibility of drawing on existing tenants, marketing 

units to new tenants, or both. 

Over time, owners that have met their Set-Asides may 

lose QUs as previously qualified tenants experience 

income changes or move out. Owners will not be 

considered out of compliance due to such changes as 

long as the procedures are followed to replace the 

qualified tenants. Section 3.5 outlines the procedures for 

replacing these units. 

If an owner fails to follow the procedures to replace QUs 

which have experienced tenant income changes or 

vacancy, the property will be out of compliance with the 

LURA. In such a case, the owner must restore 

compliance with the property's occupancy requirements 

by following the procedures for renting available units 

presented in Section 3.6. 

2.5	 RECORD-KEEPING AND REPORTING 

REQUIREMENTS 

There are record-keeping and reporting requirements that 

owners must meet to assure compliance with the LURA. 

These requirements fall into five major groups: 

0 on-site record-keeping; 

0 monthly reports during the pre-compliance period; 

0 annual compliance reports; 

0 owner certifications; and 

AHP Owner’s Compliance Manual 2-15 9/97 
0 cooperation during agency on-site reviews. 

A. On-Site Records 

As set forth in the LURA, all records concerning the 

property must be kept separate from the owner's other 

business records unrelated to the property and in a 

reasonable condition to allow for proper audit. The 

records must be maintained as required by the monitoring 

agency and in accordance with the procedures in the 

Owner's Compliance Manual. Representatives of FDIC 

or the monitoring agency may examine or make copies of 

documents pertaining to the property during regular 

business hours. 

There are two principal types of on-site records owners 

must maintain and keep available for inspection: tenant 

files and monthly unit listings. 

Tenant Files 

Owners must keep a tenant file for each QU. Each file 

must contain: 

0 the tenant's rental application; 

0 a Release and Consent Form signed by all adult 

members of the household; 

0 proper income verification documents; 

0 the current TIC; and 

0 a proper dwelling lease. 

All tenant files must be maintained for at least three years 

after the date the tenant moves out. 

Monthly Unit Listings 

Owners also must keep monthly unit listings that correctly 

reflect occupancy at the property on the beginning of each 

month or a date established by the monitoring agency. 

These listings will provide monitoring agencies with an upto-date record of QUs. They also allow monitoring staff 

to track changes in the status of QUs and unrestricted 

units during past months to confirm that over-income and 

vacated QUs were properly replaced. 

AHP Owner’s Compliance Manual 2-16 9/97 
A monthly listing should provide the following information 

for each unit: 

0 unit number 

0 number of bedrooms 

0 tenant name 

0 household size 

0 effective lease date 

0 monthly rent 

0 unit status (VLI-QU, LI-QU, OI-QU or unrestricted 

unit) 

Owners may meet this requirement by adapting their 

monthly rent rolls to provide the necessary information. 

Also, the computerized reporting system as described 

later in Chapter 6 may be used to maintain this 

information. 

Monitoring agencies may request that owners provide a 

copy of the most recent unit listing at any time during the 

monitoring year. Owners must keep accurate copies of 

the unit listings for the past three years. 

B. Compliance Reports 

Every owner also must submit regular compliance reports 

to their monitoring agency. These reports document a 

property's occupancy and show whether an owner is in 

compliance with the provisions of the LURA for the 

property. 

The compliance report summarizes the status of the 

property's QUs and includes a listing of every unit in the 

property, including both QUs and unrestricted units. The 

types of information the owner must provide for each unit 

include: 

0 building identification 

0 unit number 

0 number of bedrooms 

0 tenant name 

0 number of persons 

0 date of lease agreement 

0 unit designation (VLI-QU, LI-QU, OI-QU, 

unrestricted unit) 

0 annual household income (QUs only) 

0 monthly unit rent (QUs only) 

AHP Owner’s Compliance Manual 2-17 9/97 
0	 date of last income certification/recertification 

(QUs) 

All of the information needed to complete a report should 

be readily available from the Tenant Income Certification 

(TIC) form. A copy of the AHP Compliance Report is 

provided in Appendix F. 

Pre-Compliance Monthly Reporting 

Owners of properties that have not reached initial full 

compliance must submit monthly compliance reports. 

This monthly reporting requirement continues until the 

property reaches full compliance with the Set-Asides. 

Monitoring agencies may ask owners to report on a 

monthly basis at other times, such as when a property has 

fallen out of compliance, to assure continued compliance. 

With each monthly report, owners must include copies of 

the TICs for each newly designated QU. For example, the 

April monthly compliance report for a property should 

include TICs for all units designated as QUs since the 

March report. 

The monitoring agency will specify the start and end dates 

of the report, as well as the day the report is due (i.e., the 

date or number of days after the end of the reporting 

period). 

Annual Reporting 

Once a property reaches full compliance, and the owner 

has certified full compliance to the monitoring agency, the 

owner may submit compliance reports annually rather 

than monthly. Owners can continue to report annually as 

long as the property remains in full compliance with the 

occupancy and other provisions of the LURA. 

However, recordkeeping on monthly turnover (as 

described above) continues as an obligation, and it is 

necessary for owners/managers to constantly monitor the 

property for compliance, so that the proper decision can 

be made when a unit is available. 

Annual reports document the occupancy status of a 

property as of the end of each monitoring year. With 

each annual compliance report, owners must provide 

copies of the TICS for every initial certification or 

recertification during the year. 

AHP Owner’s Compliance Manual 2-18 9/97 
Monitoring agencies may ask owners to include additional 

materials with their annual reports to assist in evaluating a 

property's continued compliance with the LURA. 

C. Owner Certifications 

As evidence that a property is in compliance with the 

LURA, owners must provide monitoring agencies a written 

certification of their property's compliance. Owners must 

submit the certification when a property reaches initial 

compliance and then with each annual report. 

A sample copy of an Owner Compliance Certification 

Form is included in Appendix G, and further guidance is in 

Chapter 6. 

D. Cooperation During Agency On-Site Reviews 

In addition to review of reports submitted by the owner, 

representatives of the monitoring agency will conduct 

periodic on-site reviews of AHP properties and their 

records to evaluate owner compliance with the LURA. 

During a review, owners and their property management 

staff must provide monitoring staff with access to all 

documents relevant to an evaluation the owner's 

continued compliance with the provisions of the LURA. 

Monitoring agencies will give owners reasonable advance 

notice prior to conducting an on-site visit. The managing 

owner and key on-site staff should be present during the 

review whenever possible. 

2.6 ADMINISTRATIVE FEES 

A. Annual Administrative Fee 

To offset the cost of monitoring owner compliance, the 

LURA establishes that owners must pay the monitoring 

agency an annual administrative fee. The base fee 

generally will be found in Section 4.6(a) of the LURA. 

The fee is computed for the number of QUs the LURA 

requires the owner to hold available for occupancy by Low 

Income tenants. The required number of QUs is 

AHP Owner’s Compliance Manual 2-19 9/97 
multiplied by the base monitoring fee established in the 

LURA, but is never less than $250 per property. 

The annual administrative fee is due the day the LURA is 

signed and covers the subsequent 12-month period. The 

next annual fee is due on the anniversary date of the 

LURA. However, the monitoring agency, with proper 

notification to the owner, may establish a 12-month fee 

period that begins on a day other than the anniversary 

date of the LURA. 

The monitoring agency will send each owner an invoice 

for the coming year's monitoring fee at least 30 days prior 

to the start of the upcoming fee period, and specify the 

due date of the fee. 

B. Adjustment of Annual Fee 

Each year, monitoring agencies may adjust the annual fee 

for increased costs due to inflation, based on the 

Consumer Price Index for All Urban Consumers (CPI-U). 

C. Administrative Fees For Non-Compliance 

If the monitoring agency determines that a property is out 

of compliance with the provisions of the LURA, the LURA 

permits it to require an owner to pay an additional 

administrative fee. This non-compliance fee, if charged, 

is in addition to the annual fee. 

The State Monitoring Agency is entitled to be 

compensated for any additional monitoring and 

enforcement activities for a period of up to three years 

following the most recent finding of non-compliance with 

regard to the property. 

In addition, the LURA requires owners to reimburse the 

monitoring agency for all costs and legal fees to which the 

agency may be entitled as a result of judicial enforcement 

action. These fees are payable regardless of whether 

the monitoring agency undertakes or succeeds in judicial 

enforcement action. 

2.7 RESALE REQUIREMENTS 

The requirements of the LURA run with the property, and 

are transferred to any new owners of the property during 

AHP Owner’s Compliance Manual 2-20 9/97 
the compliance period. Owners should notify their 

monitoring agency of any resale of the property at least 

30 days prior to closing. This notification is necessary to 

give the monitoring agency sufficient time to prepare for 

the change in ownership and take actions necessary to 

assure continued compliance with the LURA. 

2.8	 CASE STUDIES & FREQUENTLY ASKED 

QUESTIONS 

The following pages provide case studies of three AHP 

properties. The cases are designed to help owners 

manage the designation of QUs. Answer pages follow 

the case studies. 

Following the case studies is a compilation of frequently 

asked questions and answers provided by FDIC. 

AHP Owner’s Compliance Manual 2-21 9/97 
THREE AHP CASE STUDIES 

PROPERTY 1: Sunset Apartments 

Sunset Apartments is a 100-unit apartment building overlooking Horizon Bay. All units have 

two bedrooms. It was purchased from FDIC three months ago by Make a Buck Inc. All the 

units are occupied. The LURA requires 35 units be set aside as Qualifying Units (QUs) -- 20 

Very Low Income and 15 Low Income. 

The FDIC rent limits and market rents for a two-bedroom unit in the community are: 

LI Rent Limit (30 percent of 65 percent): $450
 

VLI Rent Limit (30 percent of 50 percent): $400
 

Market Rent: $500
 

The owner has designated no QUs. While it is likely that there are some tenants in the project 

who are Low Income (many of the tenants are elderly retirees), no tenant surveys have been 

conducted nor incomes certified. All the tenants are paying market rents. 

What, if anything, must the owner do to assure compliance with the LURA and the 

requirements of the AHP? 

AHP Owner’s Compliance Manual 2-22 9/97 
PROPERTY 2: Mystery Market Village 

Mystery Market Village is a 200-unit townhouse development in suburban Upturn. It is a 

beautiful project, well maintained, but far from the central business district and public 

transportation. 175 units are occupied. 

The property's set-asides require 40 Very Low Income and 30 Low Income units. The rent 

limits for a two bedroom unit are as follows: 

LI Rent Limit (30 percent of 65 percent): $370
 

VLI Rent Limit (30 percent of 50 percent): $350
 

Market Rent: $370
 

The owner/manager has designated all 30 LI QUs, but no VLI QUs. She has many people 

who have applied for the vacant units, but they all have incomes greater than 50 percent of 

median. In fact, most of the applications are from tenants with income over 80 percent of 

median. Very Low Income applicants have not filled out applications. She is very anxious to 

rent the vacant units since her cash flow is quite tight. 

What, if anything, must the owner do to assure compliance with the LURA and the 

requirements of the AHP? 

AHP Owner’s Compliance Manual 2-23 9/97 
PROPERTY 3: FDIC Homes 

FDIC Homes, a newly formed non-profit, has purchased a 100-unit AHP project in downtown 

Centerville. The project is 100 percent occupied. The LURA requires 25 Low Income and 40 

Very Low Income units. The rent limits in the community for two-bedroom units are as follows: 

LI Rent Limit (30 percent of 65 percent): $350
 

VLI Rent Limit (30 percent of 50 percent): $330
 

Market Rent: $350
 

FDIC Homes has designated the required number of both Low and Very Low Income tenants. 

They have just recertified tenant income and discovered that five of the previously Low Income 

tenants are now Very Low Income. 

What, if anything, must the owner do concerning the rent and QU designation of the five 

tenants whose incomes have changed? 

AHP Owner’s Compliance Manual 2-24 9/97 
ANSWER
 

PROPERTY 1: Sunset Apartments 

What, if anything, must the owner do to assure compliance with the LURA and the 

requirements of the AHP? 

The owner has a number of different options for assuring compliance. 

Option 1. The owner may lease the Next Available Units (NAU) as they become vacant to 

income qualified tenants until the set-asides are met. 

The owner must continue to lease to LI or VLI tenants (any tenants with income £ 80 percent 

of median income) until the balance of the VLI and the Total Set-Aside has been met (15 

units). Remember, rents for the VLI units may not exceed $400/month and rents for the LI 

units $450. 

Option 2. The owner may survey the entire tenant population to determine if there are any 

Qualified Tenants in occupancy. If a survey is performed, the owner should establish a fair 

and equitable manner for assigning the QU designation. For example, the Qualified Tenants 

could be identified based on length of tenure, lowest tenant income, or by lottery. 

If the survey did not identify sufficient tenants to meet the Total Set-Aside and VLI Set-Aside, 

the owner must rent the next available units to Qualified Tenants, giving priority to VLI tenants 

as in Option 1. 

Option 3. The owner could use Option 1 and Option 2 together. The owner could survey the 

population and designate some units from among the existing tenants. The rest of the setaside could be met by filling vacancies with Qualified Tenants, giving priority to VLI tenants. 

AHP Owner’s Compliance Manual 2-25 9/97 
ANSWER
 

PROPERTY 2: Mystery Market Village 

What, if anything, must the owner do to assure compliance with the LURA and the 

requirements of the AHP? 

Until the owners meet their VLI obligation, they must reserve enough vacant units to fill the VLI 

Set-Aside. In this case, all 25 vacancies would have to be held for VLI tenants. 

The owners should consider surveying the entire resident population to determine if any 

existing tenants are VLI. Whenever an owner surveys the tenant population, they should 

establish a fair and equitable manner of designating QUs. 

If none of the existing tenants are VLI, the owner is required to rent the 25 vacant units to VLI 

tenants. In addition, since the LURA requires a total of 40 VLI tenants to meet the VLI SetAside, the next 15 vacancies must be rented to VLI tenants. 

Owners having difficulty in locating VLI tenants are advised to: 

_	 Review their advertising and marketing material to see if it may be deterring 

applications from low income applicants. For example, words like "luxury," 

"prestige," "elegant" may suggest that units are not within the pocket-book of the 

applicants the owner needs to attract. 

_	 Consult with local religious organizations, social service agencies, housing 

counseling groups, and housing authorities and community development 

agencies. Many of these groups maintain waiting lists of persons in need of 

affordable housing. 

_	 Check with existing tenants. They may have friends or relatives who are looking 

for affordable units. 

_	 Consult with the State Monitoring Agency. 

AHP Owner’s Compliance Manual 2-26 9/97 
ANSWER
 

PROPERTY 3: FDIC Homes 

What, if anything, must the owner do concerning the rent and QU designation of the five 

tenants whose incomes have changed? 

The LURA requires the owner to reduce the rents on the five QUs which used to be LI but as a 

result of re-examination are now occupied by VLI tenants. The rents must be reduced from 

$350 to $330. The unit designations in the next monitoring report change to VLI. 

The owner remains in compliance since the number of QUs meets the Total Set-Aside. The 

next QUs can be filled by a VLI or LI household since this property has more than enough VLI 

tenants. 

AHP Owner’s Compliance Manual 2-27 9/97 
Common AHP Compliance Questions & Answers 

Start-up and Pre-Compliance 

1.	 I am preparing to take over ownership or management of an AHP property. What 

should I do first? There are five steps that an owner should take immediately: 

•	 review the LURA and the Owner’s Compliance Manual to become familiar with your 

Set-Aside and AHP compliance procedures; 

•	 prepare a management plan that incorporates AHP compliance procedures and 

required AHP documents and forms; 

•	 train all persons who will be involved in applicant intake, property management and 

reporting; 

•	 develop a strategy for marketing and working with existing occupants and 

vacancies to achieve full compliance; and 

•	 establish contact with your monitoring agency. 

2.	 How long does the Pre-Compliance Period last? Properties are expected to come into 

compliance as soon as possible. How long it takes a property to reach initial compliance 

depends on the number of in-place tenants who are income eligible, the number of 

vacancies, and unit turnover. Owners are expected to follow rules with regard to nondisplacement of existing tenants and reservation of vacant units for qualifying tenants, and 

it is expected that properties will reach Full Compliance within two years. 

3.	 Do I have to survey my existing tenants? No. AHP procedures only require 

owners/managers to lease vacant units to qualified tenants. However, if a property 

contains income eligible tenants, surveying tenants can considerably shorten the length of 

time needed to reach initial compliance. This will shorten the time owners are obligated to 

submit Pre-Compliance monthly reports, and could reduce the time units must be held 

vacant while finding Qualifying Tenants. 

4.	 If I survey all my tenants and find several who do not qualify, are those tenants 

required to vacate the property? No! The LURA states that under no circumstances 

may an owner/manager terminate the occupancy of any in-place tenant solely for the 

purpose of meeting the property’s low income set-asides. 

5.	 During the pre-compliance period, can the vacant units held available for qualified 

tenants be counted toward the number of units needed to meet the property’s setasides? No, only Qualifying Units can be counted toward a property’s Set-Asides, and 

units may not be designated as Qualifying Units until they are occupied by a qualified 

tenant. 

AHP Owner’s Compliance Manual 2-29 9/97 
 

6.	 How long do I have to hold vacant units available for qualified tenants? Until the 

project has met both the Total Set-Aside and Very Low Income Set-Aside requirements, 

vacant units must be leased or held available for Qualifying Tenants. If owners/managers 

have been unsuccessful in attracting income eligible tenants to fill vacant units, they should 

contact the monitoring agency for additional guidance about how to reach these 

households. 

Income Eligibility 

7.	 If I have questions about the proper way to calculate a tenant’s annual income, where 

can I go to find answers? Under AHP, a tenant’s annual income is calculated according 

to the method used to determine gross annual income for HUD’s Section 8 Program. This 

method differs from the way a household’s income is calculated for tax purposes. 

Owners/managers should refer to Chapter 4 and Appendix C. For additional information, 

contact your monitoring agency. Also, the local Section 8 Administrator or Public Housing 

Authority may be able to provide some guidance. 

8.	 What does anticipated annual income mean? Owners/managers are required to 

anticipate the amount of income a household will receive during the coming 12-month 

period. Generally, this amount is calculated by estimating the family’s annual income 

using current income and assets. However, if changes from current circumstances can be 

verified (e.g., an approved raise, an expected bonus, a change in the number of overtime 

hours to be worked) these should also be considered in anticipating annual income. 

Appendix C of the AHP Owner’s Compliance Manual includes specific instructions for what 

sources to include and exclude as anticipated annual income. 

9.	 AHP also requires including income from assets in annual income. Can you give 

some examples of what is considered an asset and what is not? Under AHP, there is 

no limitation on the amount of assets an eligible household can own. But, anticipated 

income from assets must be included in the calculation of annual income. Section 8 

program rules specify the types of assets to be considered. Generally, assets held for 

investment purposes are included, while “ personal use” assets are not. Common 

examples of assets that are counted include: savings accounts; checking accounts 

(including non-interest-bearing accounts); real estate; and personal property held as an 

investment (e.g., coin collections). Examples of assets that should not be counted 

included necessary personal use property such as vehicles, furniture, appliances, stereos, 

and VCRs. Business assets of tenants who are self-employed also should not be 

counted; income from those assets should be reflected in the net income statement for the 

business. Appendix C of the AHP Owner’s Compliance Manual includes further 

information. 

10. I have students living in my property. Can I designate their units as Qualifying 

units? What do I count as income for students? Units occupied by students may be 

designated as Qualifying Units as long as the student household is determined to be 

income eligible. Under AHP, you must include the portion of grants, scholarships or 

veteran’s benefits that is available for subsistence. Whether you also include amounts 

used to cover the cost of tuition, fees, books, transportation, and miscellaneous personal 

expenses depends on the source of the payment. Do not count amounts used to cover 

the cost of tuition, fees, books, transportation and miscellaneous personal expenses 

(whether paid directly to the student or directly to the institution) which are provided 

AHP Owner’s Compliance Manual 2-30 9/97 
 

 

 

through student loans, grants, scholarships or veteran’s benefits. Do count amounts used 

to cover tuition, fees, books, transportation and miscellaneous personal expenses if they 

come from any other source. Student loans, regardless of how they are spent, are not 

counted as income. 

11. Is a telephone verification valid for purposes of verifying employment income? 

Third-party written verifications or first-hand documentation (e.g., paycheck stubs) are 

preferred. However, in cases where these methods are not feasible, telephone 

verifications may be used as long as management staff complete, sign, and date a form 

which identifies the third party oral source. Telephone verification of assets is almost 

never feasible. Chapter 4 of the AHP Owner’s Compliance Manual contains an exhibit 

outlining acceptable verification procedures. 

12. When verifying the income of tenants with a Section 8 Certificate or Voucher, is the 

income verification of the housing authority acceptable? Yes. Owners/managers 

can satisfy AHP verification requirements by obtaining copies of the housing authority’s 

verification documents. Another option is to have the authority provide a letter stating that 

the household’s verified annual gross income does not exceed an amount equal to the 

applicable AHP income limit. These tenants still must execute a proper AHP Tenant 

Income Certification (TIC) Form. 

13. If Section 8 income eligibility guidelines change, do the AHP income guidelines also 

change automatically? Monitoring agencies are permitted to incorporate changes in 

Section 8 income eligibility guidelines into the AHP Program, except for changes in the 

definitions of student income, which are unique to the AHP Program and may be changed 

only by notice from FDIC. If you hear about Section 8 changes, contact your monitoring 

agency to determine whether you should implement those changes for AHP. 

14. When do the income limits used to determine tenant eligibility change, and how do I 

obtain the new limits? AHP income and rent limits are updated each year when HUD 

publishes its revised figures for area median incomes. Generally, these are released in 

late Winter or Spring each year. Monitoring agencies will provide owners/managers with 

updated limits as they become available year to year from FDIC. 

15. If a change in household status or household income occurs between annual recertification, is the tenant required to advise the manager? Is the manager required 

to monitor these changes? No, unlike some HUD programs, tenants are only required to 

report changes in household income or composition at the time their eligibility is re-certified.

 Likewise, managers are not required to monitor household changes that occur between 

re-certifications. 

Designating Qualifying Units and Meeting/Maintaining Set-Asides 

16. What happens if a vacant unit is leased as a Qualifying Unit, and later it is found out 

that the tenant is not qualified? If the tenant provided improper information, he/she has 

violated the lease clauses in Chapter 5, and action may be taken to terminate the lease in 

consultation with the Monitoring Agency. If the owner wishes to not pursue lease 

termination, and instead replace the lost QU with the Next Available Unit, consult with the 

Monitoring Agency. On the other hand, if the owner/manager made a mistake in certifying 

eligibility, the tenant of the improperly designated unit may not be removed, and the 

AHP Owner’s Compliance Manual 2-31 9/97 
owner/manager must rent the Next Available Unit to a qualified tenant. To avoid this 

problem, it is important to verify a household’s income and complete the TIC prior to 

granting occupancy. 

17. If a property’s VLI Set-Aside has been met, but not the Total Set-Aside, can the 

remaining units be rented to VLI-eligible tenants and designated as LI units? No. A 

Qualifying Unit’s designation reflects the income level of the tenant. Qualifying Units 

occupied by tenants with incomes less than or equal to the VLI income limit must be 

designated as VLI units, even if the VLI Set-Aside has already been met. 

Owners/managers are not required to designate additional VLI units if VLI Set-Asides have 

been met and only LI units are needed. However, they may choose to designate additional 

VLI units to be counted toward the Total Set-Aside. If they do so, they must remember that 

all VLI units are restricted by the applicable VLI rent. 

18. If I rent unrestricted units to low income and very low income tenants (after I have 

met my Total Set Aside), must I designate their units as Qualifying Units? No. 

Owners are only obligated to designate enough Qualifying Units to meet the set-asides. 

Tenants living in unrestricted units are not subject to AHP rent limits. Low income and 

very low income households may apply for and occupy unrestricted units just as any other 

households, subject to the same standard and lawful screening and selection criteria 

applied to all applicants. Furthermore, owners may find it advantageous to have low 

income and very low income tenants in unrestricted units in order to expedite the 

replacement of a unit that becomes available in the set-asides. 

19. Does AHP have occupancy standards specifying the unit size (i.e., number of 

bedrooms) appropriate for a given household size? No. Owners/managers are 

expected to establish their own occupancy standards and apply them consistently 

throughout the property, and to comply with state or local law regarding occupancy 

standards, if applicable. 

20. What does the statement in the LURA about “best efforts to achieve a comparable 

unit distribution among QUs” mean? AHP does not require that the unit size 

distribution precisely match the distribution for the total property (including all units). 

However, when owners have choices about which units will be designated as Qualifying 

Units (QUs), the LURA requires them to designate units so as to avoid an unbalanced 

distribution. For example, if half of the units are two bedroom units or larger, and 

significantly less than half of the QUs are such, then the owners/manager needs to make a 

good faith effort to designate some larger units as they become available and replacement 

QUs are needed to meet the set-aside. 

21. When does a unit actually become a “qualifying unit”? When that unit is occupied by 

an income eligible tenant (who has completed a certification form and whose information 

has been verified) who has executed a lease with the required and prohibited provisions 

incorporated. The qualification is derived from the tenant’s eligibility. The physical unit/s 

used as “ qualifying units” may shift dependent upon the tenant being housed. 

Rent Limits 

AHP Owner’s Compliance Manual 2-32 9/97 
 

22. Are AHP rent limits based on the size of the unit or the size of the household 

occupying the unit? AHP rent limits are established by unit size for both VLI and LI 

income levels. They do not vary by the size of the household in the unit. 

23. Must AHP rents be adjusted for tenant-paid utilities? No. Unlike many other Federal 

programs (such as Section 8, Tax Credits and HOME), the rents charged to the tenant can 

be set up to the applicable AHP rent limits, without regard to, or adjustment for, tenant-paid 

utilities. 

24. If a property has fully met its VLI set-aside, but still needs units to meet the Total SetAside, can a new VLI tenant be designated as an LI unit and the tenant charged an LI 

rent? No. Any Qualifying Unit rented to a VLI tenant must be designated as VLI and 

charged the VLI rent, even if the VLI Set-Aside has already been met. 

25. If the newly revised AHP rent limits are lower than the previous year’s limits, do the 

rents for Qualifying Units have to be reduced immediately or at lease renewal? 

Immediately. It is unusual for AHP rent limits to go down, but when they do, owners must 

revise rents for Qualifying Units that exceed the new limits immediately. However, rents 

are not required to be reduced below the initial approved rents in place at the time the 

building was sold by FDIC/FDIC under the AHP Program to the original owner. 

Conversely, if the rent limits go up, owners may revise Qualifying Unit rents to reflect the 

new limits, subject to state/local laws and the terms of the lease regarding interim rent 

adjustments. 

Re-certification 

26. If a re-examination reveals that a LI tenant is now VLI, what rent level and unit 

designation must be applied? A Qualifying Unit’s designation must reflect the income 

level of the tenant. Therefore, if a tenant’s status changes from LI to VLI on recertification, the unit’s designation must be changed to VLI, and the tenant charged no 

more than the VLI rent. 

27. On re-certification, a VLI tenant is over the VLI income limit, but not over the 140% LI 

limit. If I re-designate that unit as LI, this leaves me one unit short of the VLI SetAside. What do I have to do to be in compliance? Because the re-certified tenant is 

designated as LI, you still have enough units for the Total Set-Aside, but are short of VLI 

units. You must follow the Next Available Qualifying Unit (NAQU) rule, so that the next 

available LI unit must be rented to a VLI tenant. You do not have to rent an unrestricted 

unit as VLI because that would cause you to exceed the Total Set-Aside requirement. 

Therefore, you only need to “ re-balance” the portfolio by renting the first available LI unit to 

a VLI tenant. 

28. When a tenant is determined to be over income at time of re-certification, is the rent 

on that unit still restricted? No. If a tenant exceeds 140% of the current Low Income 

limit (listed on the income limits sheet as “ M-F Transition Income” ) on re-certification, the 

tenant is reported as “ Over Income” and the rent may be adjusted to the market rent for 

unrestricted units (subject to state/local laws and the terms of the lease). Owners may not 

displace tenants on the grounds that they are no longer income eligible. Next Available 

Unit (NAU) rules must be followed, and the QU may be reported as Over Income until the 

Next Available Unit becomes available and committed to a qualifying tenant. Some early 

AHP Owner’s Compliance Manual 2-33 9/97 
 

versions of the LURA contain contradictory language requiring owners to maintain the 

restricted rent until the QU was replaced with the NAU, but adjustments to the unrestricted 

rent on determination of Over Income status will be permitted on all AHP properties. 

Owners/managers of AHP properties with Tax Credits should note that this provision differs 

from Tax Credit requirements, so Tax Credit rules (as the more restrictive rule) should be 

followed. 

Unit Turnover 

29. How should a Qualifying Unit be handled when a vacancy occurs? When a 

Qualifying Unit (QU) is vacated, it continues to be counted and reported as a QU until it is 

re-occupied or replaced with another QU. If the vacated unit is leased to an incomeeligible tenant at an allowable rent, it remains a QU. If the vacated unit will be leased to a 

tenant that is not income eligible, the owner/manager must first designate a replacement 

Qualifying Unit so the property will continue to have enough units to meet its required Set ­

Aside. 

30. If a Qualifying Tenant wishes to move in-house to a different unit, how should this be 

handled? If a tenant in a Qualifying Unit (QU) moves to another unit in the property and is 

still income eligible, the Owner/Manager must shift the QU designation to the newly 

occupied unit. If the unit involves a change in unit size, the applicable AHP rent limit 

changes to reflect the size of the newly occupied unit. If other public assistance is 

involved, be sure to check the procedures of the other programs. 

Other Compliance and Enforcement Issues 

31. Do I have to use the forms included in the AHP Owner’s Compliance Manual? It is 

recommended that owners/managers use the forms, or facsimiles, in the Manual. 

Owners/managers may adapt their own forms to include all of the elements in the 

recommended form. It is recommended that any adapted forms be cleared with the 

monitoring agency. 

32. When AHP units also have other Federal funds, such as Tax Credits or HOME, and 

the rent limits and occupancy rules of the overlapping programs differ, what rules 

should be followed? You must comply with all the rules for all programs. Generally 

speaking, you can accomplish this by following the most restrictive rule. For example, if 

HOME or Tax Credits set a lower maximum rent than AHP or requires a utility allowance 

adjustment, adhering to the more restrictive program rules will also yield compliance with 

AHP rent limits. There may be times when rules appear to conflict -- particularly in 

situations of over income tenants and unit turnover. In such cases, contact your 

monitoring agency for guidance. 

33. When is a property considered to be out of compliance with AHP requirements? 

Properties that fail to meet the provisions of their LURA and the procedures in the AHP 

Owner’s Compliance Manual may fall out of compliance with requirements primarily for any 

of the following violations: 

•	 Improperly leasing vacant units during Pre-Compliance or whenever below the SetAside requirements; 

AHP Owner’s Compliance Manual 2-34 9/97 
 

•	 Failing to maintain a sufficient number of Qualifying Units; 

•	 Failing to determine and verify Qualifying Tenant Income at least annually, or 

improperly determining eligibility; 

•	 Charging rents for Qualifying Units in excess of applicable AHP rent limits; 

•	 Failing to submit timely reports to the monitoring agency; and 

•	 Failing to pay the required administrative fee. 

34. What happens if I fail to follow AHP compliance procedures? Monitoring agencies will 

notify owners if they determine that compliance violations have occurred and indicate the 

necessary corrective action(s). Owners will be given a period of time to complete the 

corrective actions. Failure to take corrective can result in administrative and/or judicial 

sanctions against the owner. 

Owner Data Entry Program 

35. Am I required to run the Owner Data Entry Program (ODEP) system? 

Owners/managers are encouraged, but not required, to use the ODEP system. It is 

available for free from your monitoring agency, and 

36. What kind of computer is needed? It runs on IBM compatible computers.......It does 

not run on Mac systems, and also does not run on Windows NT. If you are running it on 

another Windows environment and having problems, try running under DOS mode. 

37. My computers are on a local area network. Will ODEP run in a network 

environment? ODEP was not designed to be network compatible, and therefore will not 

function as a multi-user program. 

38.Where do I get the manual for ODEP? The Manual is attached as Appendix J to the 

AHP Owner’s Compliance Manual. Additional copies can be obtained from your 

monitoring agency. 

AHP Owner’s Compliance Manual 2-35 9/97