On April 14, 2017, HUD released the 2016 Multifamily Tax Subsidy Project Income Limits (MTSP), with an effective date of April 14, 2017.

 

HUD Releases MTSP Income Limits for 2017

 

On April 14, 2017, HUD released the 2016 Multifamily Tax Subsidy Project Income Limits (MTSP), with an effective date of April 14, 2017. These limits are now loaded into our database system, DevCo. The MTSP limits are issued in response to changes in the income limit methodology as required under the Housing and Economic Recovery Act of 2008. MTSP limits include HERA special limits and are subject to change each year; however, a project can “hold harmless” or maintain use of an existing limit when the new limit decreases. The counties with HERA special limits for 2017 have changed significantly. The MTSP limits are for use by housing tax credit and multifamily bond projects. OHFA has posted online the MTSP Income and Rent limits based on the 50% and 60% of area median income (AMI) respectively.
The applicable income limit for a housing tax credit or multifamily bond project is based on the year in which the building is placed in service and the county in which the building is located. Buildings within projects may have various placed-in-service dates, so owners should use caution when selecting the income limit(s). The income limit for a building is based on one of the following two criteria: 

  1. Buildings placed in service prior to 1/1/2009 apply the highest MTSP income limits or HERA limits from the Placed in Service date to now.
  2. Buildings placed in service on or after 1/1/2009, apply the highest MTSP income limits from the Placed in Service date to now. Note: projects placed in service on or after 1/1/2009 cannot use the HERA special limits. 

Example: Tiffin Senior was placed in service in 2014 in Clinton County. Its four-person 60% MTSP income limit would have been $35,280. In 2017, the MTSP income limit applicable to Tiffin Senior would remain at $35,280, despite the fact that the MTSP income limit for Clinton County in 2017 is $34,560. However, a new housing tax credit development, Salmon Chase, placed in service in 2017 in the same county would use the 2017 MTSP income limit $34,560.


Project rents are also calculated based on the higher of the income limit in effect since the placed in service date or the latest income limit. When determining the applicable limits to be used at a property, the following additional considerations must be considered and followed when applicable:

  • Housing tax credit projects with either HOME or HDAP (Housing Development Gap Financing) must use the current HOME limits for all HDAP-assisted units. Units using HOME or OHTF must continue to use the 2016 HOME income and rent limits until HUD issues the 2017 HOME income and rent limits. 
  • Projects financed with HUD programs, such as Section 8 or Rural Development 515 projects, cannot use the HERA income and rent limits and must use current MTSP limits.
  • An owner should follow the guidance in IRS Revenue Procedure 94-57 for rent limits which describes the process for electing a gross rent floor. Based on this, a project could have a rent floor based on an income limit higher than the limit used to determine occupancy.

Owners seeking additional guidance regarding the appropriate housing tax credit income and rent limits and gross rent floor may wish to refer to the Novogradac & Company rent and income calculator. The HOME program limits are not available through this calculator. Note: Use of the Novogradac rent and income limit calculator is not a safe harbor for violations of rent and income restrictions.


Owners have 45 days to implement the new limits or by May 29, 2017.


Please direct any questions regarding this message to Betsy Krieger by email at bkrieger@ohiohome.org.