Massachusetts Law Reform Institute
99 Chauncy Street, Suite 500, Boston, MA 02111
(617) 357-0700 # FAX (617) 357-0777
Transmitted by fax (202-283-2516) and mail
March 30, 2004
Internal Revenue Service
Attn: Grace Robertson, C9-466
5000 Ellin Road
Lanham, MD 20706
Re: Comments on Draft Guide for Completing Form 8823 (LIHTC Report of
Noncompliance), Chapter 11
Dear Ms. Robertson:
We are writing on behalf of the undersigned organizations that represent the interests of low
income families and individuals who reside or seek to reside in Low Income Housing Tax Credit
(LIHTC) properties. We comment specifically on Chapter 11 of the Draft Guide (concerning
violations of the Fair Housing Act). We have not reviewed other sections of the Draft Guide and
offer no comments except as to Chapter 11.
Legal Background
The background for our comments is our understanding that the Fair Housing Act applies directly
to the Department of Treasury, to all state Housing Finance Agencies (HFAs) that administer the
LIHTC program, and to all owners and managers of tax credit properties. The Department is
required to "affirmatively further [fair housing]" as set out in 42 U.S.C. § 3608(d), and in
Executive Order 12892 (Jan. 17, 1994). The duty to "affirmatively further fair housing" requires
the Department and state HFAs to closely monitor tax credit properties for discriminatory
practices; it also requires the Department and state HFAs to affirmatively promote nondiscrimination
and racial integration in other ways, including but not limited to analyzing the racial
concentration effects of LIHTC siting and adopting procedures to avoid perpetuating racial
segregation in the program. See Shannon v. HUD , 436 F.2d 809 (3d Cir. 1970). The duty to
affirmatively further fair housing is also delegated to state HFAs and owners by I.R.S. regulation
26 CFR § 1.42-9, which incorporates HUD non-discrimination and site selection rules. LIHTC
owners and HFAs are also covered by Title VI of the Civil Rights Act of 1964, and its
implementing regulations, which forbid discrimination based on race, color or national origin,
either by intent or as a result of a seemingly neutral policy or practice. HUD's Title VI
regulations, like the Fair Housing Act, also obligate HFAs and tax credit owners to administer
their programs affirmatively to overcome conditions of discrimination and take other steps to
accomplish the purposes of Title VI.
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Our comments do not address all of these important legal issues, because the Draft Guide is
limited to monitoring of discrimination by current tax credit properties. The issues of project
siting to promote integration, the content of state Qualified Allocation Plans, and other
procedures of state HFAs are beyond the scope of these comments. We urge the Department,
however, to consider these larger issues, because we believe that many state HFAs are not
complying with their statutory duty to affirmatively further fair housing. We would like to
address these issues with the Department at a later time.
Comments on Chapter 11
We believe that the current draft of Chapter 11 is seriously deficient in its failure to explain clearly
the broad scope of owners' fair housing obligations, in the lack of documentation required (which
will leave monitoring agencies without the information they need to certify compliance), and in its
omission of key obligations to persons with disabilities and persons with limited English
proficiency.
1. Providing more explicit fair housing guidance: The current draft of Chapter 11 gives owners
almost no notice of their Fair Housing and Title VI obligations. This lack of information places
both owners and state HFAs in legal jeopardy. The chapter should be revised to comprehensively
list and explain each civil rights obligation applicable to LIHTC properties, including but not
limited to non-discrimination by race, national origin, ethnicity, sex, familial status, disability, and
source of income; the owner's duty to affirmatively market LIHTC units; and accommodations
for victims of domestic violence and persons with limited-English proficiency.
2. Enhanced documentation from owners: State HFAs do not have meaningful information with
which to assess owner compliance with these requirements. Owners should be required to submit
basic fair housing information to the monitoring agency:
a. Racial and ethnic data: Basic data must be provided by owners of tax credit properties
about the racial demographics of building occupants, applicants, and neighborhood in
order to assess compliance with fair housing requirements. Data also is needed regarding
the language preference of applicants and tenants who are limited-English proficient. The
Department cannot engage in a meaningful review of compliance without this information.
Owners should provide, and state HFAs should maintain, at least the following data:
-Overall breakdown of race/ethnicity/national origin of residents and applicants to
the property (see, for example, HUD forms HUD-27061 & HUD-27061-H)
-Race/ethnicity/national origin of census tract & census block where the property
is located
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-Primary language of limited-English proficient tenants
-whether the project is family or elderly housing (or other specialized type of
housing)
b. Data on Section 8 voucher admissions and occupancy: 26 USC § 42(h)(6)(iv) prohibits
discrimination against Section 8 voucher holders in LIHTC properties. Basic data on
Section 8 admissions and occupancy are crucial to assess owner compliance with this
requirement. Owners should be required to report the number and percent of Section 8
voucher holders residing in the property.
c. Documentation of affirmative marketing efforts: Title VIII and its accompanying
regulations, which are incorporated by reference in 26 CFR § 1.42-9 and Form 8823,
require owners to affirmatively market LIHTC units to those groups least likely to apply.
See 24 CFR § 200.600-640. Owners in predominantly white communities should be
required to maintain and submit evidence that they have aggressively marketed units in
nearby minority communities (equivalent data should be reported for projects in
predominantly minority communities) or it will not be possible to assess compliance with
these requirements.
d. Reporting of discrimination complaints: The current draft of Chapter 11 requires
reporting only of fair housing lawsuits filed by the Department of Justice, and cause
findings in HUD or state equivalent agencies. It is unclear why this limitation is included,
as DOJ fair housing lawsuits account for only a tiny fraction of meritorious fair housing
complaints, and the vast majority of administrative complaints are resolved long before a
"cause finding" can be made (indeed, the most egregious discrimination cases are often
settled the most quickly). Meaningful assessment of FHA compliance will be completely
inhibited unless owners are required to report all fair housing actions and administrative
complaints filed against them (including settled cases), along with a copy of the complaint,
and the status or disposition of each claim. Tax credit sanctions must be imposed where
there is any violation of civil rights obligations.
e. Disclosure of potentially discriminatory admissions practices: Owners should disclose
any geographic based admissions preferences, along with racial and ethnic data on the
preference area as compared to the larger housing market area.
3. Disability: The draft Chapter 11 is seriously lacking in guidance about how to deal with issues
confronting people with disabilities. Several key issues have been omitted and should be
included.
a. Guidance that tells state Housing Finance Agencies that if a property fails to comply
with the Fair Housing Act's design and construction requirements the following steps at a
minimum must be taken: (i) the property must have an independent assessment made of
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the full scope of all design and construction violations; (ii) the property must provide a
comprehensive time line for full correction of all violations, consistent with remedial
actions approved in consent decrees approved by HUD or the United States Department
of Justice, regardless of whether or not a complaint has been filed, and (iii) absent
compliance with these requirements, IRS reporting must be conducted.
b. Chapter 11 should provide detailed guidance and examples about compliance with the
Fair Housing Act provisions that require that housing providers make reasonable
accommodations that will permit persons with disabilities to benefit from the housing,
permit reasonable modifications to the premises, and in general not discriminate against
persons with disabilities. See generally HUD Notice Housing 01-02, extended by HUD
Notice Housing 2003-10. Handicap discrimination represents the highest number of
discrimination complaints filed over the past three years with HUD and an area where
there is significant confusion among housing managers.
4. Ensuring access for limited-English proficient (LEP) tenants and applicants: The Department
of Treasury, HUD and DOJ each have published "guidances" informing all entities that receive
federal funding either directly or indirectly from each agency of their obligations under Executive
Order 13166 and Title VI of the Civil Rights Act of 1964 to provide meaningful access to Limited
English Proficient (LEP) persons. The Department of Treasury guidance, published on March 7,
2001, was "effective immediately." 66 Fed. Reg. 13829 (March 7, 2001) (Guidance of Federal
Financial Assistance Recipients on the Title VI Prohibition Against National Origin Discrimination
Affecting Limited English Proficient Persons). The DOJ and HUD LEP Guidance Notices were
published in 2002 and 2003. See 67 Fed. Reg. 41455 (June 18, 2002) (DOJ); 68 Fed. Reg. 70967
(December 19, 2003) (HUD). See also "Language Assistance Self-Assessment and Planning Tool
for Recipients of Federal Financial Assistance" (www.lep.gov/ selfassesstool.htm). It is critical
that the Department remind recipients of their LEP obligations by alerting them to the Treasury,
HUD and DOJ LEP guidances. The Department should further emphasize that the DOT and
HUD guidances set forth the guidelines for evaluating a fair housing complaint relating to LEP
access issues. Finally, recipients should know that all parts of a recipient's operations are covered
by the guidances even if only one part receives federal funding.
Conclusion
We hope that the Department will carefully consider these recommendations. There is increasing
scrutiny of the fair housing performance of LIHTC properties across the country, and the
Treasury Department should take a lead role in explaining to owners the scope of their fair
housing obligations.
This letter has covered some of the basic fair housing issues not included in Chapter 11 of the
Draft Guide. There are of course many other issues affecting the health and well being of low
income tenants that are beyond the scope of this letter, including legal requirements protecting
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tenants from lead paint exposure, good cause eviction protections for tenants of LIHTC
properties, and other issues. We hope that these issues also are carefully reviewed by the
Department before the Draft Guide is issued, and that the Department consistently solicits the
views of tenant organizations and other advocacy groups working with low income tenants.
Respectfully Submitted,
Judith Liben
Massachusetts Law Reform Institute
99 Chauncy Street
Boston, MA 02144
David J. Harris
Fair Housing Center of Greater Boston
59 Temple Place, #1105
Boston MA 02111
Philip Tegeler
Poverty and Race Research Action Council
3000 Connecticut Ave. NW, Suite 200
Washington, D.C. 20008
Edward Johnson
Oregon Law Center
813 SW Alder #500
Portland, OR 97205
Kevin D. Walsh
Fair Share Housing Center
510 Park Boulevard
Cherry Hill, New Jersey 08002
Michael Allen
Bazelon Center for Mental Health Law
1101 15th Street, N.W., Suite 1212
Washington, D.C. 20005-5002
Erin Boggs
Interim Legal Director
Connecticut Civil Liberties Union Foundation
32 Grand Street
Hartford Connecticut 06106
Jorge Elorza
Rhode Island Legal Services
56 Pine Street
Providence, RI 02903
Gideon Anders
Executive Director
National Housing Law Project
614 Grand Avenue, Suite 320
Oakland, CA 94610
Ilene J. Jacobs
California Rural Legal Assistance, Inc.
511 D Street, Post Office Box 2600
Marysville, CA 95901
631 Howard Street, Suite 300
San Francisco, CA 94105
Elizabeth K Julian
Law Office of Elizabeth K. Julian
3301 Elm Street
Dallas, TX 75226
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