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LIHTC Maximum Rent vs Preferential Rent

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LIHTC Maximum Rent vs Preferential Rent

Postby TinyBee » Fri Sep 07, 2018 10:32 pm

I moved into an 80/20 building last year and I'm confused about the different definitions of rent in the lease. I think the landlord might be overcharging.

The lease states the "Legal Rent" is ~$900, while for now I am being charged a temporary "Preferential Rent" of $700 due to "market conditions". The lease contains a preferential rent rider that makes all this clear, so this seems fine.

However I qualified for a 40% AMI unit and according to the LIHTC rider in the lease, the Tenant's Maximum Rent should be 30% of 40% of the AMI (adjusted for the number of bedrooms). My calculations are as follows. The unit has 1 bedroom so that's 1.5 individuals, and for 2018 the AMI for 1.5 individuals in this area is about $80000. 30% of 40% of that gives a Maximum Rent of $800/month.

The landlord is charging me $700 right now, so that's less than $800 and that seems fine... but they are also claiming the "Legal Rent" is $900, which is more than the Maximum Rent of $800. I'm worried that in 4 years, after the 4-year time limit to challenge the rent with the NYC DHCR expires, they will raise the rent to the "Legal Rent" and overcharge me.

So my questions are:

* Does the LIHTC "Maximum Rent" apply to the Legal Rent, or just to the Preferential Rent i.e. what they are actually charging me each year?

* Will I still be able to challenge the rent after 4 years if they raise the rent above the $800 limit, or will it be too late? Should I act now?

All advice much appreciated - thanks!
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Re: LIHTC Maximum Rent vs Preferential Rent

Postby TenantNet » Sat Sep 08, 2018 3:20 am

I don't know if I can answer this correctly as you have too many variables going on.

With regular rent stab units, a LL may charge less than the legal rent and that is the so-called preferential rent (PR). The ability of the LL to remove the PR and start charging the full legal rent depends on what is in the rider that is included in the initial lease. DHCR has a Fact Sheet on PR: http://www.nyshcr.org/Rent/FactSheets/orafac40.pdf

PRs are not "fine" as they are often used to evict tenants and clear buildings.

As far as I know, the term "Maximum Rent" used in this context is not a legal term ... it's just descriptive.

There are different types of 80/20 buildings and each should have its own regulatory agreement. Get a copy of that document as it might shed light on what can/can't be done.

As for your AMI calculation, again, that depends on the particular building and regulatory scheme. Either HPD or DHCR would administer your building.

But see this: https://streeteasy.com/blog/area-median-income-nyc/
40% AMI for a family size of 1 would be $29,240 for 2018. I guessing that would then be:

$29,240/3 = $9746/12 = $812. From what I understand, you can't set the amount when you use the number of rooms to determine the number of individuals. The actual number of people that will occupy the unit is what you use.

You should probably check with the building management to see if they can clarify things for you. But I would also check with the administering agency to help properly calculate things. LLs are often wrong.

LIHTC stand for Low Income Housing Tax Credits and that has to do with financing construction of the building, not the setting of the rent as far as I know.
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