Affordable Housing Incentive Program Compliance Manual
Revised 2023
City of Seattle Office of Housing
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Table of Contents
Table of Contents .......................................................................................................................................... 2
Chapter 1. Introduction ................................................................................................................................ 6
Compliance Basics ..................................................................................................................................... 6
Governing Documents .............................................................................................................................. 6
Transition to Monitoring ........................................................................................................................... 7
Program Overlap ....................................................................................................................................... 7
Chapter 2. Procedures for Initial Lease-Up and Filling Ongoing Vacancies .................................................. 9
Pre-Lease Inspections ............................................................................................................................... 9
Initiating Lease-Up .................................................................................................................................... 9
Affirmative Marketing at Lease-Up ......................................................................................................... 10
Lease-Up Report ..................................................................................................................................... 11
Filling Vacancies ...................................................................................................................................... 11
Leases ...................................................................................................................................................... 12
Housing Costs ...................................................................................................................................... 12
Recertification and Requalification ..................................................................................................... 13
Prohibition on Subleases..................................................................................................................... 13
Audit .................................................................................................................................................... 13
Chapter 3. Eligible Tenants ......................................................................................................................... 14
Household Composition – Occupancy Guidelines .................................................................................. 14
Employees ............................................................................................................................................... 14
Students .................................................................................................................................................. 15
Guarantors .............................................................................................................................................. 17
Exempt income ................................................................................................................................... 17
Non-Exempt Income ........................................................................................................................... 17
Rent Subsidy Recipients .......................................................................................................................... 17
Household Demographics ....................................................................................................................... 18
Subleases................................................................................................................................................. 18
Chapter 4. Income Certification, Annual Recertification, and Tenant-Driven Requalification .................. 19
Income Projection Period ....................................................................................................................... 19
Initial Occupancy – Income Certification Process ................................................................................... 20
Ineligibility: Disqualifying Households at Move-In ................................................................................. 22
Income Recertification and Requalification ............................................................................................ 23
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Scheduled Annual Income Recertification Process ................................................................................. 23
Calculation Examples for Annual Recertification ................................................................................ 26
Notice of Ineligibility Upon Recertification ......................................................................................... 27
Tenant-Driven Actions that Trigger Income Requalification .................................................................. 27
Timing the Requalification .................................................................................................................. 28
Conditions Triggering Requalification - and Exceptions ..................................................................... 28
Examples ............................................................................................................................................. 28
Determination of Ineligibility .............................................................................................................. 29
Designating “Next Available” Replacement Units .................................................................................. 30
Chapter 5. Verifying & Calculating Income and Assets ............................................................................... 31
Overview – What Is Income? .................................................................................................................. 31
Verification Process ................................................................................................................................ 31
3rd Party Income /Asset Verification .................................................................................................. 31
Tenant-Provided Documents .............................................................................................................. 32
Verification of Common Types of Income and Assets ............................................................................ 32
Chapter 6. Rent Restrictions ....................................................................................................................... 33
Treatment of Mandatory Recurring Fees ............................................................................................... 33
Fees for Optional Services....................................................................................................................... 33
Restrictions on One-Time or Up-Front Charges ...................................................................................... 33
Rent Concessions .................................................................................................................................... 34
Utility Allowances ................................................................................................................................... 34
Required Disclosures ............................................................................................................................... 35
Rent Increases Upon Lease Renewal ...................................................................................................... 35
Chapter 7. Compliance Activities ................................................................................................................ 36
Annual Property Certification Report ..................................................................................................... 36
Site Visits, Audits, and File Review .......................................................................................................... 37
Interim Site Review ................................................................................................................................. 37
What Is in a File ....................................................................................................................................... 37
Mandatory Forms for Every File ......................................................................................................... 37
Situational Corresponding Documentation ........................................................................................ 38
File Set Up Best Practices .................................................................................................................... 38
Rounding ................................................................................................................................................. 39
Scope of Review ...................................................................................................................................... 39
On-Site Review Scope ......................................................................................................................... 39
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On-Site File Compliance Review: Designated Units ............................................................................ 39
Non-Compliance ..................................................................................................................................... 40
Changes in Ownership/Management ..................................................................................................... 42
Record Retention .................................................................................................................................... 42
Compliance Fees ..................................................................................................................................... 42
Publicly Funded Projects ......................................................................................................................... 43
Chapter 8. Expiration of Unit Affordability Requirements ......................................................................... 44
Compliance Period .................................................................................................................................. 44
Program Extension .................................................................................................................................. 44
Affordability Terms vs Effective Leases .................................................................................................. 45
Change of Use ......................................................................................................................................... 45
Final Report ............................................................................................................................................. 46
Appendix A. Income and Asset Verification and Calculation ...................................................................... 47
Section 1. Income .................................................................................................................................... 47
Wages .................................................................................................................................................. 47
Self Employment ................................................................................................................................. 51
Contract Work ..................................................................................................................................... 52
Seasonal Employment ......................................................................................................................... 53
Unemployment ................................................................................................................................... 53
Gift Income .......................................................................................................................................... 53
No Longer Receiving a Gift .................................................................................................................. 54
Student Income ................................................................................................................................... 54
TANF & ABD ........................................................................................................................................ 55
Seattle Housing Authority Section 8 Voucher Holders ....................................................................... 56
Social Security ..................................................................................................................................... 57
Pensions .............................................................................................................................................. 58
Alimony and Child Support ................................................................................................................. 58
Military Pay ......................................................................................................................................... 59
Selling of Goods .................................................................................................................................. 60
VENMO/PAYPAL/CASHAPP ................................................................................................................. 61
Rental Income ..................................................................................................................................... 61
Employee Rent Concessions ............................................................................................................... 61
Income Changes – Recent Changes to Income ................................................................................... 62
Trusts: When the applicant is the beneficiary. ................................................................................... 62
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Additional Income Information ........................................................................................................... 62
Section 2. Assets ..................................................................................................................................... 64
Checking Accounts .............................................................................................................................. 65
Savings Accounts ................................................................................................................................. 65
Stocks/Bonds/Treasury Bills/Certificates of Deposit/Money Market Accounts ................................. 65
Online Financial Accounts ................................................................................................................... 66
Retirement Accounts .......................................................................................................................... 66
Trusts-When the applicant is the grantor. .......................................................................................... 67
To calculate income, apply the same protocol as you would a Stock/Bond/etc. above. ................... 67
Life Insurance ...................................................................................................................................... 67
Real Estate Owned .............................................................................................................................. 67
Personal Property / Collectibles Held as Investment.......................................................................... 68
Annuity ................................................................................................................................................ 68
Cash on Hand / Funds Not Held in a Financial Institution .................................................................. 68
Assets Disposed of for Less than Fair Market Value ........................................................................... 68
Transactions Found in Statements...................................................................................................... 68
Withdrawal of Cash or Assets from an Investment ............................................................................ 69
Joint Assets .......................................................................................................................................... 69
Appendix B. Abbreviations and Defined Terms .......................................................................................... 70
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Chapter 1. Introduction
The following guidance applies to the City of Seattle Affordable Housing Incentive Programs (“Incentive
Programs”): the Multifamily Tax Exemption program (MFTE), Incentive Zoning (IZ), and Mandatory
Housing Affordability (MHA). It also applies to site-specific development agreements or other
contractual arrangements that require property owners to produce and operate income- and rent-
restricted rental units.
Compliance Basics
When the owner (“Owner”) of any residential real estate asset (“Property”) participates in any of the
Incentive Programs, the Owner is obligated to provide a certain number of affordable housing units for a
specific period of time. For purposes of this manual, affordable housing is generally defined as any rental
unit subject to maximum limits on tenant incomes and rents. Specific income- and rent-restricted rental
housing units within a given Property are termed “Designated Units.”
The Office of Housing (OH) monitors all property owners’ compliance with their affordability obligations
throughout the contractual term of affordability. An Owner’s obligation to provide income- and rent-
restricted units takes effect as soon as lease-up begins and continues until the affordability obligation
under any executed covenant, contract, or agreement is extinguished for all Designated Units within the
Property. The Office of Housing’s program staff (“Program Staff”), who assist developers enrolling in the
Incentive Programs, and asset management staff, who provide ongoing compliance monitoring, work
closely to ensure that the obligation is met throughout the life of any governing documents. In some
cases, affordability requirements for a single Designated Unit may be set under multiple Incentive
Programs with different terms. In these cases, the Compliance Period continues until the longest-lasting
obligation expires, as discussed later in this chapter.
The heart of the compliance monitoring process is an annual certification process. Most certification
work is carried out via an annual report and supporting documents that the Owner or their designee
submits annually to the Office of Housing. The monitoring process also includes periodic audits, such as
site visits and reviews of tenant files and other documentation.
The OH website provides links to most of the forms referenced in this manual. Unless another website
is identified in the text, please use this link to obtain the latest copies of all forms and any
supplementary guidance.
Governing Documents
The fundamental document establishing affordability and other Owner obligations is a contract,
covenant, or other form of agreement signed by both the Owner and a representative of the City of
Seattle. These agreements are recorded by the King County Recorder’s Office and generally run with the
land. This means that the obligations continue even if the original Owner sells the Property or otherwise
transfers ownership.
The form of agreement varies by program and is executed at varying stages of the development process.
Most agreements track back to and cite affordability provisions established under the Seattle Municipal
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Code or via ordinance. On occasion the Director of Housing issues rules (Director’s Rules) to interpret
Code or ordinances and establish supporting policies; OH also periodically issues guidance to interpret or
clarify statutory requirements. Guidance and standard procedures are typically documented in manuals
like this. Overarching state law, such as RCW 84.14, which authorizes local governments to establish
MFTE programs, may also apply.
Compliance with Incentive Program requirements does not relieve any Owner responsibilities under fair
housing, landlord-tenant, or other overarching law. The Office of Housing neither monitors compliance
nor enforces these provisions; however, OH may refer questions to other City offices as appropriate.
Such referrals could include the Seattle Office for Civil Rights on matters of fair housing and the Seattle
Department of Construction and Inspections (SDCI) on matters of landlord-tenant law.
Transition to Monitoring
The Office of Housing’s Program Staff for the Incentive Programs are responsible for reviewing and
approving applications, executing agreements and other documents, and carrying out other
prerequisites to a Final Certificate of Tax Exemption under MFTE or land use permits, building permits,
and/or certificates of occupancy under other Incentive Programs. Program Staff work closely with staff
from OH’s Asset Management Unit to ensure a smooth transition of oversight responsibilities as a
Property moves from the development phase to ongoing operations.
For the MFTE program, each Property will be assigned a liaison (“Compliance Liaison”) from the Asset
Management Unit upon the execution of the Final Certificate of Tax Exemption. The Compliance Liaison
will continue to ensure that the Property is meeting all of its obligations until all governing agreements
expire (“Compliance Period”). The alignment of the Final Certificate of Tax Exemption with the start of
the Compliance Period has implications both for the lease-up period and the timing of the Owner’s
access to the tax exemption benefit.
• Lease-Up: For some projects the Final Certificate of Tax Exemption may be issued after lease-up
has begun. Program Staff and the pending Compliance Liaison will work together to ensure that
pre-leasing activities and the lease-up process support program-compliant operations for the
duration of the Compliance Period. Details appear in Chapter 2.
• Tax Exemption Benefit: Regardless of the timing of the Final Certificate of Tax Exemption’s
execution, tax exemption benefit to the Owner attaches to the calendar year rather than the
leasing cycle. This may mean that the Compliance Period begins prior to the calendar year when
the Owner first realizes the tax exemption and extends through any leases in effect upon the
exemption’s expiration.
For other Incentive Programs, the handoff and the start of the Compliance Period typically occurs as
lease-up commences. As with MFTE, the Compliance Period extends through the expiration of any
affordability obligation under the relevant program agreement(s).
Program Overlap
Designated Units are considered “overlapping” if a single unit is regulated by more than one Incentive
Program. Some programs prohibit overlapping units: MHA, for example, prohibits Owners from using
the same unit to satisfy their obligations under both MHA and MFTE. Some Designated Units’
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affordability obligations under Incentive Programs (most commonly MFTE) can also overlap with
separate obligations established under various public subsidy programs.
In the cases where overlapping units are permitted, the unit must satisfy the most restrictive
requirement in effect at the time.
Example: A MFTE studio, regulated at 65% AMI, is also a Designated Unit under IZ, regulated at 80% AMI.
This unit must be income- and rent-restricted at 65% AMI for the duration of the 12-year MFTE Compliance
Period. Upon expiration of the MFTE agreement, the restriction on the unit escalates to 80% AMI for the
remainder of the 50-year IZ Compliance Period.
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Chapter 2. Procedures for Initial Lease-Up and Filling Ongoing
Vacancies
The Office of Housing’s Asset Management Unit will start monitoring compliance as soon as a property
initiates the lease-up process. Leasing staff should make all efforts to lease Designated Units to income-
qualified households as soon as lease-up begins. This ensures that Designated Units are appropriately
leased throughout the entire Compliance Period.
Pre-Lease Inspections
Office of Housing Program Staff usually conduct pre-lease inspections for Properties participating in any
Incentive Program. For some programs, including MFTE, the inspection is required for purposes of
visually confirming that the proposed selection of Designated Units meets requirements for type,
comparability, and distribution and then finalizing the roster of Designated Units.
To schedule a pre-lease inspection, Owners (or their property management staff – “PM Staff”) should
contact the OH Program Staff they have been working with. This must happen at least 45 days before
any leasing activities begin.
• For MFTE, PM Staff should provide a proposed list of Designated Units to the MFTE Program
Staff. Program Staff will provide an Excel template for use in designating units. Proposed
designations will be reviewed for consistency with OH guidance on comparability to the market-
rate units, appropriate distribution throughout the building, and proper designation of unit
types.
• Incentive Zoning and MHA performance units are designated in the housing covenants or
agreements recorded prior to the issuance of the building permit. While the final unit
designation may differ from the original due to subsequent changes to the number of units,
breakdown of unit types, or unit features, any alternate roster of Designated Units will be
subject to OH inspection and approval and may necessitate an amendment to any governing
agreements.
• The timing for identifying Designated Units will vary for incentive projects developed under
other types of standalone agreements.
The specific units selected for income and rent restriction must remain Designated Units throughout the
entire Compliance Period, with exceptions only under the “next-available rule,” described in Chapter 4.
Initiating Lease-Up
Owners/PM Staff must notify OH Program Staff as soon as they initiate pre-leasing activities.
• For MFTE projects, pre-leasing activities, such as affirmative marketing for Designated Units,
closely follow the inspection. During the inspection and as needed thereafter OH Program Staff
work with Owner/PM Staff to respond to general questions regarding the lease-up of
Designated Units, affirmative marketing, and compliance training opportunities. Following
execution of the Final Certificate of Tax Exemption Program Staff will notify the Owner/PM Staff
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of their assigned Compliance Liaison; the Compliance Liaison will support any remaining lease-
up activities as well as all compliance matters throughout the Compliance Period.
• For other Incentive Programs, the OH Program Staff’s handoff to the designated Compliance
Liaison will usually take place at the time that pre-leasing activities begin. Owners/PM Staff
should notify Program Staff as soon as they initiate general advertising or other lease-up
activities in order to receive a Compliance Liaison assignment. The Compliance Liaison will
advise on affirmative marketing and other lease-up considerations for Designated Units.
Affirmative Marketing at Lease-Up
Affirmative marketing helps to ensure all community members have access to a range of housing
choices regardless of their race, color, religion, sex, national origin, familial status, disability, or other
protected class status. Affirmative marketing actively reaches out to community members who may not
know about vacancies, feel welcome to apply, or have traditional paths to access. Affirmative marketing
also helps Owners rapidly lease Designated Units by directing advertising to intermediaries who can
identify a pool of income-qualified tenants.
Owners/PM Staff should conduct affirmative marketing at least two weeks prior to initiating any
advertising or marketing efforts that target the general public. The steps are as follows; all referenced
affirmative marketing forms or resources are available here.
1. Complete the Special Outreach for Affirmative Marketing form. This form includes information
on the number of Designated Units at the property and the income- and rent-restrictions on
those units, leasing and tenant selection criteria, and how the property intends to advertise
vacancies.
2. Identify three community-based organizations to encourage applications from households who
otherwise might be unlikely to apply for housing at the property. A list of approved Community-
Based Organizations for Affirmative Marketing is available on the OH website. Supply each
organization with information about vacancies and the leasing process using the Special
Outreach for Affirmative Marketing form.
3. Provide notice of the vacancies to the Seattle Housing Authority (SHA) by e-mailing the Special
Outreach for Affirmative Marketing form to: LeasewithHCV@seattlehousing.org. The Seattle
Housing Authority will share rental unit information with prospective tenants enrolled in SHA’s
Housing Choice Voucher program and direct eligible voucher holders to the participating
properties for application.
4. Document all efforts using the Affirmative Marketing Lease-Up Report. Note this report requires
records of your email correspondence. The Affirmative Marketing Lease-Up Report is a required
attachment of the Final Certificate application for MFTE projects, which is submitted
immediately before projects are given final approval to participate in the MFTE program. For
MHA performance projects, the Affirmative Marketing Lease-Up Report must be submitted at
the time of inspection.
Owners/PM Staff should record dates and retain documentation demonstrating that special outreach to
community-based organizations and SHA occurred at least two weeks prior to general marketing. The
documentation should be available for OH review upon request.
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Lease-Up Report
Owners/PM Staff must submit a lease-up report to each Property’s Compliance Liaison. The process and
due dates vary slightly by program.
MFTE Programs
The Lease-up Report uses the same reporting form as the Annual Property Compliance Report and will
contain the same information. This report can be found on the Incentive Program Compliance page. The
due date is dependent on when MFTE units are fully leased:
• The report will be due within two weeks of completing lease up of 100% of MFTE units, unless
• If 100% of MFTE units have not been leased-up by January 15th of the first year of Tax
Exemption, the report is due no later than January 31st of the Tax Exemption Period regardless
of the percentage of MFTE units that have been leased.
All other Programs
• The Lease-up report shall be filed with the Office of Housing within 90 days of issuance of the
temporary certificate of occupancy for the multifamily housing, or permanent certificate of
occupancy if no temporary certificate of occupancy is required, or SDCI final building permit
inspection if no certificate of occupancy is required.
Filling Vacancies
Extended vacancies of income- and rent-restricted rental units exacerbate Seattle’s existing shortage of
affordable housing. To ensure that Incentive Programs achieve their intent and vacancies are promptly
filled, OH expects owners to conduct good faith efforts to promptly fill any vacant Designated Units
throughout the full Compliance Period. During periodic audits and the annual certification process, OH
Asset Management Unit staff will review the frequency and duration of vacancies occurring throughout
the year to determine if the property is making a good faith effort to lease Designated Units. Sample
actions that would evidence good faith efforts include:
• Lowering the asking rent
• Offering one-time or ongoing rent concessions
• Affirmative marketing through direct advertising to community partners appearing in the list of
Community-Based Organizations for Affirmative Marketing, available here
• Listing vacancies with the Housing Connector
• Developing and tapping a waiting list for Designated Units.
Owners/PM Staff should communicate any 30-day vacancies to their Compliance Liaison. These
notifications should come in writing under the subject line “Extended Vacancy.” The notification should
indicate the timeline and number of denied/canceled applications and any good faith actions taken to
identify income-qualified tenants. The Compliance Liaison will use this information to help the
Owner/PM Staff develop an action plan and boost communications with agencies seeking available units
on behalf of their clients.
In the case of multiple vacancies that extend for 45 days or more, Owners/PM Staff will be encouraged
to replicate the outreach procedures required at lease-up, including special outreach to three
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community-based organizations and notice to SHA. Multiple extended vacancies and supplementary
efforts to fill units should be documented using the Affirmative Marketing Supplemental Report,
available here, and submitted to the Compliance Liaison as soon as a second vacancy lasting more than
45 days occurs; evidence of this work should also be captured in the property’s annual certification
report.
ADA Units and ADA Accommodations
Projects may have up to one ADA assigned unit for every 10 designated units. If an applicant makes a
reasonable accommodation for an ADA assigned unit and the project does not have an ADA assigned
designated unit available, the project may approve the accommodation request and switch the
designated unit to the new ADA assigned unit. The property shall communicate the reasonable
accommodation and proposed unit switch to OH prior to making the switch.
Leases
Outside of income and rent limits, tenants occupying Designated Units should be treated identically to
those occupying market-rate units in most respects. The Office of Housing expects the form of lease for
Designated Units and market-rate units to be the same but for rent amounts charged and discrete
sections that address lease provisions specific to Designated Units. Starting in 2020 those special
provisions for Designated Units should appear in a separate lease rider rather than being embedded in
the lease itself.
Special provisions appropriate for Designated Units address the following topics.
Housing Costs
All leases should include the following disclosures related to move-in, one-time, and recurring housing
costs. All fees and charges must be in writing in the lease rider, or, absent a lease rider, the lease itself or
a notice on company letterhead.
• All move-in, one-time, and recurring fees, and whether they are refundable or non-refundable,
required or optional, consistent with rules described in Chapter 6.
• All utilities paid for by the tenant and the method through which they are expected to pay (e.g.,
directly or through a third party). Common area utility expenses may not be included when
properties bill back for utility expenses.
• Whether renter’s insurance is recommended, required, or not required as a condition of
occupancy. As noted above, if renter’s insurance is required the rent for a Designated Unit must
be adjusted accordingly -- regardless of who collects the premium. When renter’s insurance is
required but not offered by the owner, landlords can use a standard adjustment. This is based
on the average cost to maintain renter’s insurance as cited by the Office of the Insurance
Commissioner for Washington State. For the current adjustment amount please refer to the OH
website.
• Any other month-to-month lease fees required for occupancy.
• The final monthly rent amount, adjusted to reflect any utility allowance and credits to satisfy
any recurring fees.
Holding Deposits
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Holding Deposits are not required for MFTE or other types of Incentive Program units. However, if an
Owner/Property Manager desires to charge one, it may do so under the following conditions:
• Holding Deposits $100 or more must be fully refundable if the applicant cancels their application
for any reason or if they are determined to be ineligible.
• Holding Deposits less than $100 may be non-refundable if the applicant cancels their application
or becomes non-responsive. Non-responsive is defined as not responding to a request for
documents or clarification for 3 days.
• Refundable Holding Deposits must be returned within 21 days of the date the applicant was
declared ineligible or non-responsive.
• If the approved applicant signs a lease, the Holding Deposit must be applied towards their
security deposit.
Recertification and Requalification
Depending on Incentive Program, annual income recertification and/or situational income
requalification may be required. The specifics of recertification and requalification are described in
Chapter 4.
• Disclosure of annual income recertification requirements.
• Disclosure of income requalification requirements triggered by tenant actions.
Prohibition on Subleases
• A prohibition on subleasing, including short-term rentals such as AirBnB.
Audit
The full lease and lease rider or alternate program-specific addenda must be signed by the tenant and
Owner before the tenant occupies a Designated Unit. All documentation must be made available to OH
upon request and within a reasonable timeframe.
Owners/PM Staff can anticipate that OH staff will review the form of lease and specific items required
for Designated Units throughout the life of the Compliance Period.
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Chapter 3. Eligible Tenants
Qualifying prospective tenants for occupancy of Designated Units is an essential part of the leasing
process, both at the point of lease-up and at unit turnover. This chapter addresses special eligibility
considerations; income qualification procedures appear in Chapter 5.
Household Composition – Occupancy Guidelines
Because the demand for family-sized income- and rent-restricted units far outstrips supply, Owners/PM
Staff should apply a minimum occupancy standard to larger units, such that resident households consist
of no fewer than one person per bedroom. (A pending birth or adoption can count toward the
household size.) The occupancy guidelines effective starting in 2020 appear below.
Studio
One-Bedroom
Two-Bedroom
Three-Bedroom
Four-Bedroom
One Person
Minimum
One Person
Minimum
Two Person
Minimum
Three Person
Minimum
Four Person
Minimum
Incentive Programs establish no maximum occupancy standards beyond those appearing in local
building codes.
Following the date of move-in, a change to household composition will not necessitate remaining
household member(s) to change units or move out, subject to ongoing income eligibility as discussed in
chapter 4.
Employees
While Owners can choose to offer on-site managers reduced rents as part of a compensation package,
any unit designated for occupancy by an on-site manager cannot count towards the count of Designated
Units; no manager unit can be used to satisfy a property owner’s obligation to provide a minimum
number of Designated Units.
Other staff employed by the Owner or property management firm are eligible to occupy Designated
Units so long as they meet all qualification criteria and the unit is not a condition of employment.
However, rent discounts are a common add-on in company compensation packages and must be
accounted for purposes of both tenant income and rent level, as follows.
• Income. Any compensation in the form of rent discounts or other credits against housing costs
must be included as part of the tenant’s income, with the discount or credit appearing as a
separate line item along with wage income during the income certification process.
• Rent. The amount of the discount or credit shall not be the mechanism for achieving the
restricted rent level; any discount or credit availed to staff must drive rents below the affordable
rent level required under the Incentive Program.
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Students
Unlike the Low-Income Housing Tax Credit (LIHTC) program, households with adult full-time students
that meet certain eligibility conditions may be considered for occupancy of designated units, but only if
they meet certain conditions and fully document their Financial Aid and income eligibility as outlined
below. As with all other MFTE applications, uncorroborated statements of zero income will not suffice
for the qualification process.
To be considered for occupancy of a Designated Unit, a full-time student must have completed a:
• Free Application for Student Aid (FAFSA) or a Washington Application for State Financial Aid
(WASFA)
• Have received a Student Aid Report (SAR) and be receiving need-based financial aid such as:
o Federal Pell Grant
o Washington College Grant (formerly known as the State Need Grant)
o William D. Ford Subsidized Federal Direct Loan
o Teacher Education Assistance for College and Higher Education (TEACH) Grant
o GI Bill or VR&E benefits (Veteran Readiness and Employment Chapter 31)
o or another need-based loan or grant awarded through the FAFSA or WASFA process
International students can be considered eligible. International students must have an I-20 Certificate of
Eligibility for Nonimmigrant Student Status, which includes their F1 or J1 visa, and they must have
completed a WASFA and be receiving need-based financial aid.
Graduate or PhD students can be considered eligible. While it is less likely for them to have completed a
FAFSA or WASFA prior to their application for housing, it is possible. They can be considered by
completing a FAFSA/WASFA and have accepted one or more forms of need-based financial aid.
Graduate students often come with additional fellowships or stipends, which are not typically need-
based in nature. OH, considers these forms of income as non-exempt and must be included in the
household’s projected income calculation.
Qualifying a Student:
Before completing an income eligibility screening, students must first be a qualified student.
(1) Review the Student Aid Report (SAR) produced by the FAFSA or WAFSA aid process
• Students can access this information from the FAFSA or WAFSA portal and print off.
(2) Verify the student’s full-time status/registration
• The student should provide a registration print off confirming the credit hours for the
term. If not accessible online the student should visit their Registrar Office.
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(3) Verify the student’s financial aid income (listed on the financial aid award letter as issued by the
educational institution) to verify need-based aid and determine what, if any, in their Financial Aid
package will be deemed exempt.
• Financial Aid award letters are issued by the accredited educational institution of
enrollment. If the student does not have this award letter, they should visit their school’s
Financial Aid Office or online system. Students must have accepted one or more of these
need-based financial aid. For examples of common need-based aid, see below. If you
require additional assistance, please contact OH.
(4) If 1,2, and 3 are true, continue the income eligibility for income/assets that are not need-based
Financial Aid (e.g., employment, Social, gift income, funds verified in the I-20 form for International
Students).
Common need-based aid:
• GI Bill or VR&E benefits (Veteran Readiness and Employment Chapter 31)
• Federal Pell Grant
• Washington College Grant (formerly known as the State Need Grant)
• Teacher Education Assistance for College and Higher Education Grant
• Willim D Ford Subsidized Federal Direct Loan
• Other need-based loans or grants
Not considered need-based aid:
• Stipends
• Fellowships
• Unsubsidized loans (i.e., Unsubsidized Direct Plus Loans)
• Residencies
• Graduate Service Appointments
• Employment in exchange for financial award
• Foreign government support for schooling in the United States (International Students)
While student aid income will be exempt, it must still be documented and verified. The
steps for documenting and verifying student status are as follows, with additional detail on
calculation and verification appearing in Chapter 5.
1. Complete and review the forms. Applicants who indicate full-time student status on the
cover page of the Income Declaration form must complete a Student Status Certification
available via the OH website. This form asks several questions around student status and
student aid which help substantiate if the student has a financial need. Owners/PM Staff will
need to pay attention to the anticipated graduation date and anticipate wages if graduation
is within the following 12 months.
2. Calculations. The Student Status Certification should show both need-based aid, which is
considered exempt for purposes of the income qualification process, as well as all other
sources of income, regardless of whether those sources are exempt. Property Management
Staff should calculate and project any income other than need-based student aid over the
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following 12-month period and include all sources of income on the Income Declaration
form (ID) and Tenant Income Certification (TIC). Total exempt and non-exempt income
should be calculated and entered on the bottom of the Student Status Certification. Non-
exempt income listed on the Student Status Certification should also be listed on the ID and
TIC, following the annual/quarterly calculations listed on page 2 of the Student Status
Certification. All other income identified throughout the certification process shall be
calculated and projected over the following 12-month period. All non-exempt income must
be listed on the TIC.
Guarantors
Guarantors are not included towards the household size nor is any of the guarantor’s income included in
the certification of the household.
Exempt income
Student income listed directly on the financial aid award letter shall be exempt.
Non-Exempt Income
Any monies received not listed on the financial aid award letter will not be considered exempt and must
be counted in full towards the total household income. Gifts or monies received from family or any
other community organizations not connected directly to the financial aid office must be counted in full
towards the total household income.
The Office of Housing’s current student status policy took effect on November 1, 2020. Students already
residing in one of the Incentive Programs units will be vested under the previous compliance guidelines.
Students residing in a Designated Unit prior to November 1, 2020 and who must recertify their income
due to a change in the household composition will not be vested and must follow the current compliance
requirements. If there has not been a change to household composition and the property does require
annual recertification (MFTE P5+, MHA) the household will be recertified under the compliance
guidelines used at move-in.
Rent Subsidy Recipients
Prospective tenants who receive any kind of rent subsidy for low-income households are eligible and
encouraged to apply for Designated Units under any of the Incentive Programs.
Applicants should be screened like any other tenant regardless of subsidy status; however, the income-
to-rent ratio should be determined using the following method and example:
Gross Monthly Rent: $1,918 (85% 2bed)
minus Monthly Subsidy: $1,586 (confirmed by tenant provided subsidy award letter)
_____________________________________________
Tenant responsibility/portion = $332
Income/rent ratio of 2.5 = ($332 x 2.5) $830 minimum monthly income needed
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The most common housing subsidies include federally funded Housing Choice Vouchers, administered
by SHA; Shelter-Plus-Care, administered by local nonprofit organizations; and Rapid Rehousing and HEN,
also administered by local nonprofit organizations.
None of these publicly funded subsidies should be considered income for purposes of income eligibility
calculations. However, these amounts should be included in the tenant file and included on page two of
the TIC for informational purposes and reported to the OH as part of the annual reporting process.
Household Demographics
In 2020, OH began collecting demographic information for households residing in units governed by
Incentive Programs consistent with other assistance programs. This information will be used to help
ensure our programs are accessible to all members of the community. Each household must complete a
Resident Demographic Form prior to move-in. There is no penalty for tenants who do not wish to
provide the requested information, however all adults (18 years or older) must sign and date at the
bottom of the form to confirm that the option to disclose was made available. Household demographic
data will be reported during the Annual Property Certification Report. Signed Resident Demographic
Forms must be kept on file for review during on-site audits for all households that moved into Incentive
Program units on or after the start of 2020. Properties that leased on or after the start of 2020 must
have a signed Resident Demographic Form on file for every household living in a Designated Unit.
Subleases
Designated Units are intended for residential use by the income-eligible household only. As noted in
Chapter 2, Incentive Program lease riders for these units must include a prominent prohibition on
subleases to a substitute tenant; renters appearing on the lease for Designated Units are expected to
maintain permanent occupancy in their leased units with exceptions made only short-term absences
such as vacations. Short-term rental (e.g., Air BnB) of Designated Units are also prohibited.
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Chapter 4. Income Certification, Annual Recertification, and
Tenant-Driven Requalification
The Owner has ultimate responsibility for renting Designated Units to income-eligible occupants.
Households are deemed income-eligible if the household income is equal to or lower than the amounts
that OH publishes on its website. The maximum incomes for prospective tenants are a function of the
required percentage of Area Median Income (AMI) for the Designated Unit that the household seeks to
move into (“Affordability Classification”) and household size. Note that specific income limits under
identical Affordability Classifications can vary by program, so it is important to select the schedule for
the correct Incentive Program.
Income eligibility is calculated on a prospective basis, subject to a 12-month income projection period.
Initial certification occurs at the point of occupancy, and tenant households must be income-qualified
prior to executing a lease. The certification process must account for income from all sources, though
the qualification process may exclude some income sources (e.g., a public subsidy such as a Housing
Choice Voucher) when determining whether a household’s income meets the income-eligibility
standard. A household’s income must be certified using source documentation to verify all amounts
anticipated to be earned over the income projection period.
Households must be income-qualified for residency not only at the point of move-in but also, under
certain circumstances, periodically throughout their tenancy. In addition, certain tenant actions, such as
a change to the adult household composition or requested unit transfers, will trigger income
requalification.
As noted in Chapter 2, lease riders for Designated Units should clearly disclose requirements for annual
income recertification when applicable and circumstances that would trigger requalification.
This chapter provides step-by-step guidance on how to conduct income certification both at move-in
and at any point that triggers recertification or requalification. Forms for income eligibility reviews can
be found on the OH website. We encourage property management to use documents directly from the
website to ensure the newest version is being used.
Income Projection Period
The income projection period is the 12 months following the anticipated initial lease start date. Current
income amounts will be projected forward over the 12-month period unless there is verifiable evidence
of an anticipated change, such as a raise, change in position, cost of living adjustment, etc. If there is a
history of receiving income (bonuses, tips, commissions), this will be projected forward if it could
reasonably be anticipated to continue, even if the employer cannot guarantee it will be received. Lapses
in income resulting from voluntary leave, medical leave, or a voluntary reduction in hours will not be
taken into consideration in the income calculation; income will be annualized as if it will be received.
All households applying to lease Designated Units must be certified as income-eligible prior to signing a
lease. Income certification and qualification must be conducted no more than 120 days prior to the the
initial lease start date to be considered valid. Certifications occurring more than 120 days in advance of
the lease start date are no longer considered valid projections and will not be accepted. Households may
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not sign a lease for a Designated Unit based on a partial or preliminary income certification. Properties
that complete income certifications after signing a lease, or that base eligibility on a certification older
than 120 days, will receive compliance findings and may jeopardize their participation in the program.
For more information on this please refer to Chapter 7.
Initial Occupancy – Income Certification Process
There are four basic steps for the income certification process at the point of move-in. Again, all should
be completed prior to the tenant signing the lease.
1. Income Disclosure. Adult applicants disclose all income and assets anticipated to be available to
the household for 12 months following the lease start date.
2. Income and Asset Verification. Property obtains income and asset documentation to verify all
sources disclosed by applicants on the ID.
3. Income Calculation. Property calculates total household income based on verified
documentation (and not applicant’s self-disclosed amounts).
4. Eligibility Determination. Property compares total household income to income cap for
household/unit and makes eligibility determination.
For applicants with a Section 8 voucher, these steps are abbreviated, so long as the applicant carries an
SHA Calculation Summary with an effective date no greater than 120 days from the lease start date. OH
allows the Calculation Summary to be used in lieu of all other income verification documents. For
specific details please refer to Appendix A.
Each of the above steps is described in detail below.
1. Income Disclosure. Owner will obtain an ID for the applicant, to be completed by each adult
household member. The ID is the applicant disclosure of all anticipated income sources and assets
available to the household over the twelve months following the anticipated initial lease start. The
ID must be completed even if no income sources are anticipated to be available to an applicant. The
applicant also agrees to notify the project in the event of any changes to their declared household
income. To be accepted, the property must ensure the following:
• The ID must be completed in full to be considered a valid disclosure. Each income and asset
source must have a “Yes” or “No” response. If a “Yes” response, the associated gross annual
income or asset value must be entered.
o If an applicant has an asset with a current value of $0, the applicant should answer “Yes”
and enter $0 for the value. It is not acceptable to leave a field blank.
• Gross annual income (before taxes) will be reported in all instances except for self-employment
income where the net earned from the business will be used.
o Applicants may not omit information on bonuses, tips, and commissions on account of
them not being “guaranteed” by an employer. If there is a history of receiving income
from any of these sources, they must be disclosed.
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• The Owner is responsible for ensuring the ID provides the requested information. For example,
if the applicant enters “$15.00” as the gross annual income from employment, a clarification
should be requested. It should not be assumed that $15.00 is the hourly wage or that
employment is full-time.
• The property and the applicant(s) will sign the ID prior to collecting any income or asset
documentation. Once complete and signed, move on to step 2.
2. Income and Asset Verification. The Owner/PM Staff must request documentation to support all
amounts disclosed on the applicant’s ID. Each income source disclosed by the applicant must be
supported by documentation. The documentation will be the basis for the final household income
calculation.
• Employment income must be verified by the property Owner/PM Staff using OH’s Employment
Verification Form, sent directly to the employer, and returned to the Property directly by the
employer. The Office of Housing recommends obtaining at least one current paystub to
supplement the information provided by the employer. When returned incomplete, a written
clarification must be requested of the employer.
o Once two or more documented attempts have been made to obtain an Employment
Verification Form from the applicant’s employer with no success, Owners/PM Staff may
instead verify income based on the six most recent consecutive paystubs. If paystubs are
not available due to the applicant having recently started the position, management
may then document income through an employment offer letter.
• All forms of unearned income (Social Security, child support, alimony, unemployment benefits,
etc.) must be verified. Please note: The City of Seattle has expanded fair housing protections for
renters who use alternative sources of income and subsidies to pay for housing costs. Among
other things, this means prospective tenants who otherwise qualify for the program cannot be
denied housing because their income comes from unemployment insurance, even if that is their
only source of income.
• All assets must be verified. Only the income earned from assets in the form of interest,
dividends, or other recurring distributions will count as income, not the value of the asset (e.g.,
the interest on a savings account would count as income, not the current account balance or
withdrawals). Once all income for all income sources is available, move on to step 3.
o The Office of Housing is no longer accepting the “Under $5,000 in Household Assets
Certification Form” for income qualification under the Incentive Programs.
3. Income Calculation and Eligibility Determination. The Owner will calculate the total gross
household income based on the verified income documentation and enter information into the TIC.
• Move-in household income is always based upon current income, annualized and projected
forward for the next 12 months after the initial lease start date. Any verifiable anticipated
changes, such as raises, seasonal employment, cost of living adjustments, bonuses, etc. must be
incorporated into the 12-month projection.
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• When calculating the total household gross income, add all income (regardless of earned,
unearned or from assets) in exact amount down to the cent, then round only the final gross
amount. If 49 cents and below, round down, if 50 cents and above round up to next dollar.
• All income calculations will be documented by the Owner/PM Staff and retained on file for
review during an audit. Owners/PM Staff may choose whether they use the City-published
income calculators or their own (calculator tape, management company calculation sheets, etc.)
however, the inputs must be shown, and the formulas must be identical to those required by
OH. Once the TIC is complete with all documentation and calculations supporting a final
household income figure, move on to step 4.
4. Income Qualification / Eligibility Determination. All information will be entered by the property
into the TIC. If the total household income calculated in the TIC is at or below the maximum income
for the unit, the household is eligible for the program. The applicants and property must sign the TIC
for it to be effective. Once the TIC has been completed in full, demonstrates eligibility, and has been
signed by both parties the applicant may sign a lease for a Designated Unit. The TIC signature and
the lease start date should be the same. The lease start date must be no later than 5 –days after TIC
signing. If the TIC demonstrates that the household income is too high to qualify, refer to the
following section on ineligibility.
Further detail on verifying and accounting for income and asset information appears in Chapter 5 and
Appendix A.
Ineligibility: Disqualifying Households at Move-In
When an Owner denies an over-income applicant to a Designated Unit, a notice of the determination
should be provided to the applicant and all income certification documentation collected to date should
be retained on file. An Owner/PM Staff should:
• Provide written notice of adverse action (RCW 59.18.257) to the applicant; explain why they
were determined ineligible for the unit.
• Provide the final income calculations from the TIC to the applicant and explain the calculations if
requested.
o It is not appropriate to send the applicant to OH to explain the calculation conducted by
the property. If there is an area of contention, the Owner/PM Staff should contact OH
directly with a specific compliance-based question.
• Establish basic grievance procedures allowing applicants to clarify income or otherwise provide
context that they believe may impact their ineligibility determination.
o Grievances must be based on a clarification of an applicant’s income that may impact
the eligibility determination. Clarifications should never be understood as allowing an
exception to established program rules. The Incentive Programs do not allow for
exceptions to the income eligibility criteria or methods under any circumstance,
including but not limited to financial hardship, medical expenses, wage garnishments,
need for emergency housing, provided notice to current landlord, etc.
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Example: The Owner determines that applicant is income ineligible based on full-time
employment income entered into the Employment Verification form by an employer.
Upon reviewing TIC, applicant notes that they only work part-time, not full-time, and the
employer made a mistake. To resolve, the Owner requests written clarification from
employer as to future amounts anticipated and may request further support for part-
time hours by obtaining paystubs and/or employment offer letter. Applicant is confirmed
to work part-time and is determined income-eligible based on documented clarifications
under existing program rules that clearly establish the need for a correction to original
calculation.
Income Recertification and Requalification
Three events can trigger a requirement to income-recertify or requalify households occupying
Designated Units.
1. Scheduled annual recertification. Some Incentive Programs require annual income recertification as
a general practice. The below table shows the move-in and annual recertification requirement by
the program.
MFTE P3
MFTE P4
MFTE P5
MFTE
P6/P6X
MHA
IZ
Move-in
Certificate
Yes
Yes
Yes
Yes
Yes
Yes
Annual
Income
Certificate
No
No
Yes
Yes
Yes
See
Covenant
Annual recertification requirements for Designated Units regulated under development agreements
or other standalone arrangements will vary depending on the terms of the governing agreements
between the Owner and the City of Seattle.
2. Requalification due to changes to household composition. Increases to the number of adult
household members after move-in require that a new certification be completed. This is true in
almost all cases; limited exceptions apply and should be discussed with staff from OH’s Asset
Management Unit.
3. Requalification due to transfer between certain Designated Units. Designated Units within a single
Property often have different Affordability Classifications. Tenants who seek to move between
Designated Units of different Affordability Classifications must be income-requalified prior to
moving into the desired Designated Unit. If the household cannot qualify for the requested unit’s
Affordability Classification, the household must be given the option to remain in the original unit.
Scheduled Annual Income Recertification Process
For Properties subject to annual income recertification, Owners/PM Staff should take the following four
steps to income-requalify existing tenants of Designated Units.
1. Determine the recertification effective date.
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2. Determine the Recertification Cap. The Recertification Cap is the maximum income that a
Designated Unit’s existing tenant household can have in order to continue to occupy an income-
and rent-restricted unit within the Property.
3. Complete income recertification. The recertification process is similar to the process used at the
point of move-in. The Office of Housing does not allow Incentive Program tenants to self-certify
at this time.
4. Eligibility determination. If the total household income calculated in the TIC is at or below the
Recertification Cap for the unit, the household is eligible for the program. All information will be
entered by the property into the TIC. The applicants and property must sign the TIC prior to
signing a lease for it to be effective.
Each of the above steps is described in detail below.
1. Determine the recertification effective date. The recertification effective date is the anniversary of
the initial lease start date for as long at the tenant remains in the unit (or the Compliance Period
expires). The Owner/PM Staff may income-recertify households at any point within the 120-day
period prior to the recertification effective date for that household.
• The certification can be completed at any point in the 120 days prior to the
recertification effective date and is an income projection of the 12 months after the
recertification effective date.
• At the Owner’s option, the recertification effective date may be moved forward to the
1st of that month.
• The recertification effective date determines when the recertification is required to be
completed each year. The end of a lease term does not dictate when an annual
recertification is required.
Example: If the initial lease commenced on 8/25/2019, the first recertification effective date is 8/25/2020.
The Owner could opt to use 8/1/2020 as the recertification effective date instead, but not 9/1/2020. The
income recertification could be completed at any point in the 120-day period prior to either 8/25/2020 or
8/1/2020.
2. Determine the Recertification Cap. The Recertification Cap varies by Incentive Program. Tenants
continue to be income-eligible for a Designated Unit if the household annual income calculated at
annual recertification falls within the Recertification Cap established under the relevant Incentive
Program. If their income exceeds the Recertification Cap they are no longer eligible for rent
restrictions under the applicable Incentive Program and a new Designated Unit must be selected.
The Recertification Cap for specific Incentive Programs are as follows.
• MFTE Programs 5 and Beyond. Tenants in Designated Units are no longer eligible for
program participation when their household income exceeds 1.5x the income limit
applicable to the unit on the recertification effective date, taking into account the income
limit for the household’s size under the appropriate Affordability Classification upon the
recertification effective date.
o A household’s eligibility to remain in the unit, subject to the 1.5x Recertification
Cap, does not alter the base Affordability Classification for the Designated Unit.
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• Mandatory Housing Affordability Performance. Tenants in Designated Units at properties
that elected the MHA Performance option are determined income ineligible dependent on
the recertification % AMI (see below), which is based on the square footage of the unit.
o For units with net unit area of 400 square feet or less with an income limit set at
40% AMI, the household is ineligible once income exceeds the 60% AMI limit
effective upon annual recertification.
o For units with net unit area greater than 400 square feet with an income limit set at
60% AMI, the household is ineligible once income exceeds the 80% AMI limit
effective upon annual recertification.
o A household’s eligibility to remain in a unit, subject to the Recertification Cap of 60%
AMI or 80% AMI, does not alter the base Affordability Classification for the
Designated Unit. The units will remain at their initial 40% AMI or 60% AMI
designation for the purpose of income-qualifying new tenants throughout the full
Compliance Period.
• Incentive Zoning. Designated Units regulated under Incentive Zoning may or may not carry
an annual recertification requirement; the Owner/PM Staff should review the Property’s
Housing Bonus Covenant (available through an online record search of the King County
Recorder’s Office website or from OH) to determine requirements.
3. Complete income recertification. Annual income recertifications should follow steps 1-3 of the
move-in income certification described earlier in this chapter. The income recertification is valid only
if completed within the 120 days prior to the recertification effective date and is intended to
capture income anticipated to be earned over the 12 months after the recertification effective date.
• The annual income recertification requires a new and current ID income disclosure, new and
current income and asset documentation, and an updated TIC based on the newly obtained
information. Prior income verification documentation (employment verifications, bank
statements, etc.) cannot be reused, even if the income sources are the same.
• It is recommended that the income recertification process be started at least 120 days
before the recertification effective date.
• Tenants that do not respond to the Owner/PM Staff’s requests to provide required
recertification documents may be issued a lease violation if the property is unable to
complete recertification by the effective date (anniversary of initial lease commencement).
This assumes that the Owner/PM Staff has included appropriate disclosures in the Incentive
Program lease or lease rider and has provided adequate notice to the tenant of the
requirement to recertify income eligibility. Owners/PM Staff should retain all
communications with the tenant regarding the annual recertification process.
• Seattle Housing Authority voucher holders may not provide their SHA Calculation
Summaries in lieu of other income and asset verification, but rather must complete a full
Income Declaration and supply all income and asset verification documents as needed to
complete the recertification.
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4. Eligibility determination. The annual recertification will lead to one of two outcomes.
• Within the Recertification Cap. If the household’s total annual income at recertification is at
or below the Recertification Cap, the household will remain in the program and continue to
pay the restricted rent. The rent restriction will remain in place until the household moves
out, fails an income recertification, or reaches the end of a lease term following the
conclusion of the Compliance Period.
• In Excess of the Recertification Cap. If the household’s total annual income at recertification
exceeds the Recertification Cap, the household is entitled to remain in the same unit. The
Owner/PM Staff shall immediately notify their Compliance Liaison and designate the next
available unit of the same type as a Designated Unit. At that point the now-ineligible
household will no longer occupy a Designated Unit. See the “Next Available Unit” section
appearing later in this chapter for more detail on this process.
Mathematical examples appear below.
Calculation Examples for Annual Recertification
Sample Recertification Calculation, MFTE Program 5
Tenant A is a 1-person household applying for a 75% AMI 1-bedroom unit at a building participating in
MFTE Program 5. The lease will commence on 7/15/2017, so the move-in maximum income is $50,400
(2017 Schedule). The household income certifies at $45,000, is deemed income-eligible at move-in, and
signs a lease. The first annual income recertification must be completed no later than the recertification
effective date of 7/15/2018. The property management can bump the date back to the first of the
month at their option, in this example 7/1/2018. The annual income recertification can then take place
at any point in the 120 days prior to the adjusted recertification effective date of 7/1/2018.
The 2018 75% AMI 1-person income maximum applicable at the time of the annual income
recertification is $52,650. The income Recertification Cap for annual recertification is 1.5x that amount,
or $78,975.
If the applicant got a new job since move-in and is determined to have an anticipated household annual
income of $70,000 upon recertification, they are still eligible. However, if the income earned was
$80,000 on recert, the household is now ineligible due to exceeding 1.5x the income limit effective upon
recertification. If the tenant is ineligible, the property must contact OH for approval of the next available
unit of the same type (a 1-bedroom in this case), which would be designated immediately upon vacancy.
Once this occurred, Tenant A would revert to market-rate at the next available opportunity (lease
renewal or month-to-month status) once the required written notice of a rent increase was provided by
Seattle Landlord-Tenant law.
Sample Recertification Calculation, MHA Performance Option
Tenant B is a 1-person household applying for a 385 square foot studio designated for the MHA
performance program. The unit is rent/income restricted at 40% because it is less than 400 square feet
in net area. Based on a lease commencement date of 6/25/2017, the 2017 income and rent schedule
applies and the move-in maximum income is $26,880. The household income certifies at $25,000 so is
deemed income-eligible and allowed to sign a lease. The first annual income recertification must be
complete no later than the recertification effective date of 6/25/2018. The property management can
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move the date forward to the first of the month at their option and does so in this example to 6/1/2018.
The income recertification can then take place at any point in the 120 days prior to the adjusted
recertification effective date of 6/1/2018.
In MHA, ineligibility limits at recertification are based on the unit AMI restriction. A 40% AMI unit will
have a 60% AMI ineligibility restriction and a 60% AMI unit will have an 80% AMI ineligibility restriction.
As this example is an annual recertification, the 2018 60% AMI 1-person income maximum of $42,150 is
applicable.
If the applicant obtained different employment since move-in and earns $38,000 upon recertification,
the household is still eligible. However, if the income earned was $45,000 upon recertification, the
household is now ineligible. If the tenant is ineligible, the property must contact OH for approval of the
next available unit of the same type (a studio in this case), which would be designated immediately upon
vacancy. Once this occurred, Tenant B would revert to market-rate at the next available opportunity
(lease renewal or month-to-month status) once the required written notice of a rent increase was
provided. MHA requires a 6-month notification period once the affordability designation has transferred
before a rent increase can take effect.
Notice of Ineligibility Upon Recertification
An income ineligibility determination upon recertification does not provide justification for an eviction
and does not necessitate transferring the household to another unit. An ineligibility determination does
not confer a right to the Property to increase the rent during a fixed term lease and all applicable law
related to notification requirements must be followed when the Owner intends to increase the rent.
The Owner may increase the ineligible household’s rent to market-rate only upon designating the next
available comparable unit as a replacement Designated Unit. Once the new Designated Unit is in place
and the income-ineligible tenant’s fixed-term lease is approaching expiration, Owners/PM Staff must
provide required written notice of a rent increase as follows.
• MFTE Program 5 and Program 6 and Incentive Zoning units: Follow standard notification periods
for rent increases in the City of Seattle: 180 days written notice for an increase in periodic or
monthly rental rate (SMC 7.24.030A).
• MHA Performance Option: Upon the transfer of the affordability restriction to a new Designated
Unit (i.e. the day it becomes vacant or is leased to a new income-eligible occupant), the Owner
shall give the ineligible household six months notice prior to any rent increase (SMC
23.58C.050.C.6.f.).
Tenant-Driven Actions that Trigger Income Requalification
Separate from scheduled annual income recertifications discussed in the previous section, two
circumstances can trigger income requalification under all Incentive Programs: (i) a change in the adult
household composition, or (ii) a tenant’s elective move to a Designated Unit of a different Affordability
Classification. Some limited exceptions apply, discussed below.
Income requalification due to these changes do not consider the Recertification Cap used during a
scheduled annual recertification (such as 1.5x current cap for MFTE Programs 5 and 6), but instead use
the current income limit for the Designated Unit, just as if the household were a new move-in.
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Timing the Requalification
Unless an exception applies (see below), Owners/PM Staff must complete income requalifications for
households in Designated Units prior to the change in household composition or a unit transfer. The
date of the change to the household’s composition or the date of the unit transfer will be the
household’s new income certification effective date. If the Owner is required to complete annual
income recertifications, the first recertification will be due on the anniversary of this date.
• Example: Household AB is determined to be income-eligible and moves in on 4/1/2019. The household
intends to add household member C on 10/1/2019. The Owner will complete an income requalification for
ABC based on the 3-person income limit effective 10/1/2019 and only makes the change if the household is
eligible. The new recertification effective date will be 10/1 each year going forward.
Conditions Triggering Requalification - and Exceptions
Type of
Change
Requalification Required
No Requalification Required
Change to
Household
Composition
• Add adult
• Change adult
• Changes to the number of minors living in the unit
• Changes due to following conditions:
o A restraining order, stalking or domestic
violence situation involving household
member
o Death, illness, or disability of a household
member
o Call of household member to military service
o Divorce or legal separation
Transfers
between
Designated
Units
• Transfers between Designated
Units of different Affordability
Classification
• Transfers between Designated
Units regulated under different
Incentive Programs
• Transfers between Designated Units of identical
Affordability Classification
• Transfers between Designated Units when
triggered by reasonable accommodation under the
Americans with Disabilities Act
Examples
• Addition of an adult household member
o Income-eligible household member A requests the addition of new household member
B. An income requalification of household AB at the current income maximum for unit is
required prior to making the change.
• Change of adult household member
o Income-eligible household AB wants to release B from the lease, adding adult household
member C. An income requalification of household AC at the current income maximum
for unit is required prior to making the change.
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• Household requests the removal of an adult household member 12 months after the initial lease
commencement, an income requalification is not required. However, any addition of a new
adult household member will require an income requalification.
• Transfer between Designated Units of different bedroom types.
o Household AB requests a transfer from a 1-bedroom at 75% AMI unit to a 2-bedroom at
85% AMI unit, or a transfer from a 1-bedroom at 75% AMI unit to a 65% AMI studio unit.
An income requalification is required in both cases prior to making the change.
o Household AB requests a transfer from an open 1-bedroom MFTE unit to a 1-bedroom
MFTE unit. If the original open 1-bedroom is classified as a 65%AMI studio, income
recertification is required. NOTE: If the original open 1-bedroom was classified as a 75%
AMI 1-bedroom, then no income requalification is required.
• Transfer between Designated Units of the same bedroom type, including transfers between
Incentive Programs and special considerations for open 1-bedrooms.
o Household AB requests a transfer from an open 1-bedroom classified as a 65% AMI
MFTE studio to an open 1-bedroom classified as a 75% AMI MFTE 1-bedroom.
Requalification is required.
o Household AB requests a transfer from an MHA studio regulated at 60% AMI to an MFTE
studio unit regulated at 65% AMI. Requalification is required.
o Household AB requests a transfer from an MFTE 1-bedroom regulated at 75% AMI to an
MHA 1-bedroom regulated at 60% AMI. Requalification is required.
o Household AB requests a transfer from an IZ 1-bedroom regulated at 80% AMI to an
MFTE 1-bedroom regulated at 75% AMI. Requalification is required, despite the units
having identical income limits.
1
Determination of Ineligibility
If a tenant’s requested change to household composition or move to another unit would cause the
household to become ineligible after the change is made, the household can elect to not make the
change and remain in the existing Designated Unit. If the household chooses to proceed with the change
and convert to a market-rate lease, the Owner/PM Staff must designate the next available unit of the
same type as a replacement Designated Unit following the procedures described in the “Next Available
Unit” section appearing later in this chapter.
The Office of Housing does not approve changes of household members or unit transfers; OH only
establishes the point at which income requalification is required to determine continued program
eligibility. Income-eligible occupants who do not report household changes (including additions,
1
Owners/PM Staff should pay special attention to income limits for MFTE one-bedrooms. Because
MFTE assumes 2-person occupancy of a 1-bedroom, the income limit associated with a 75%AMI
Affordability Classification under MFTE roughly equates to the income limit associated with an 80%AMI
unit under any other Incentive Program.
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changes, subleases, use of unit or room for Airbnb, etc.) to Owners/PM Staff will forfeit their eligibility
for a Designated Unit and should be removed from the program at the next available opportunity.
References to prior program rules, or unfamiliarity with the current program rules, will not be the basis
for an exception so long as the Incentive Program lease rider discloses such requirements.
Designating “Next Available” Replacement Units
When the annual recertification process or an unscheduled requalification identifies an over income
household and the tenant wishes to remain in place as a market-rate tenant, the Owner/PM Staff must
designate the next available market-rate unit of equivalent type as a replacement Designated Unit.
The replacement unit must be of a comparable size and type as the previous Designated Unit and be
regulated to the same (or lower) income and restrictions as the previous Designated Unit. The
Owner/PM Staff must lease this replacement unit to an income-eligible household as soon as
practicable. The newly designated and previously market-rate unit effectively replaces the now-
ineligible household’s unit as one of the required Designated Units.
The initial roster of Designated Units is reviewed by OH staff to ensure comparability and distribution
prior to leasing. Designated Units under the IZ and MHA programs are listed in each project’s recorded
Housing Covenant. MFTE units for projects approved in the fall of 2019 and later are listed in each
project’s Final Certificate of Tax Exemption. MFTE units for older projects are considered approved as
listed in each project’s most recent approved Annual Report.
Deviations from the original roster are allowable only when triggered by the need to identify a next-
available replacement unit due to the recertification or requalification process. Office of Housing staff
should be notified in writing and will respond to confirm that the next available unit is an appropriate
substitute. The Owner/PM Staff may be asked to provide a record of any unit changes approvals when
their Annual Report is being reviewed or during the audit process.
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Chapter 5. Verifying & Calculating Income and Assets
The process for income and asset verification and projection for eligibility review is the same for all
Incentive Programs. Each program may employ different Affordability Classifications and income limits,
but the income qualification and eligibility certification procedures remain the same.
Overview – What Is Income?
Income is the sum of all gross amounts (before any taxes or deductions) either through direct income or
payments on the behalf of all members of the household from a source outside of the household. The
total household income used for Incentive Programs is the projected/anticipated income for the 12
months or 365 days after lease commencement. All sources of income must be verified before initial
occupancy as well as annually for MHA and MFTE Program 5 and subsequent MFTE programs.
Verification Process
For each source of income listed on the ID, a corresponding verification must be in the file. All
verifications must be dated with 120 days prior to the initial lease start date. If a verification is older
than 120 days new verification must be obtained.
Income and asset verifications have a hierarchy.
Generally, information received from employers, banks, or any other 3rd party verification is the priority
documentation of the hierarchy. If attempts to obtain 3
rd
party verification are documented but
unsuccessful, the Owner may move to accept another option for verification.
3rd Party Income /Asset Verification
Forms are available on the OH Affordable Housing Incentive Program Compliance website. Owners/PM
Staff are required make at least two (2) attempts to obtain this information directly from the employer,
agency, or financial institution. They include:
• Employment Verification
• Public Assistance
• Child Support
• Savings/Checking Accounts
• Unemployment Verification
• Self-Employment Affidavit
Forms must be sent directly from property management and may not be “hand-carried” by the applicant
or tenant. Forms need to be reviewed for:
• Full information, including YTD, anticipated raises, etc.
• Completed by a person at the agency/institute that has the authority to release the requested
information.
• Any questions not answered should be followed up on by the PM Staff and appropriately
documented.
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• The Work Number: Some employers will only provide income verification via The Work Number.
It is not required, but encouraged, for PM staff to purchase a subscription to this service to
verify employment. If the Owner/PM Staff chooses not to purchase this and the employer only
verifies income through The Work Number then six (6) consecutive paystubs should be obtained
from the applicant. If it is new employment, obtain a letter of employment offer to project
earnings.
• Self-Employment applicants and tenants must complete the Self-Employment Verification form,
and provide either the most current IRS tax return or Profit or Loss statement if the business is
new.
o This includes Uber, Lyft, Post Mates, Wag, etc. People who provide services through
these companies are considered independent contractors and therefore should be filing
as a business.
o If a household does not file tax returns for their self-employment earnings, review bank
statements where payments are made for the past 6 months and annualize. In this
instance, the household should also complete the Self Employment Affidavit forms.
Tenant-Provided Documents
These documents are provided directly by the applicant or tenant and are the secondary priority in
documentation of income. They include:
• 6 consecutive pay stubs from current employment
• New hire letter if employment is recent or projected and paystubs cannot be obtained
• Award letters verifying current year award for Social Security, SSI, pensions, life insurance and
other monthly recurring benefit income
• 6 months bank statements, savings and checking
• Current statement from investments (401K, bonds, IRA, etc.) that state the YTD earnings from
the investment
• Court ordered child support
• Section 8 Calculation Summary
Verification of Common Types of Income and Assets
Detailed procedures for verifying and calculating common types of income and assets appear in
Appendix A of this Manual.
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Chapter 6. Rent Restrictions
All Designated Units are subject to maximum gross rent limits as published by OH here. The Office of
Housing sets no minimum rents. The maximum monthly rent for a given type of unit (e.g., one-bedroom
vs two-bedroom) is generally set to 30% of the maximum allowable income for a presumptive
household residing in that unit, which itself depends on an assumed number of household members
that would typically occupy a unit of that type.
Rent limits geared to a given percentage of median income may vary by program due to differing
program requirements and differences in assumed occupancy. For this reason property Owner/PM Staff
should be careful to select the correct program when identifying the governing limit on gross monthly
rent. In cases where a single unit is governed by multiple programs, the maximum gross rent should
match to the lowest published number.
The published rent limits apply to gross rent, inclusive of any mandatory recurring fees and utility costs
or allowances.
Treatment of Mandatory Recurring Fees
Rent is any amount that a tenant is required to pay for occupancy of a unit. For example, if the standard
form of lease requires renter’s insurance as a condition of occupancy, the insurance premium must not
drive monthly housing costs for the tenant of a Designated Unit above the maximum gross rent. The
same holds true for any other fees or charges required of all tenants, to include utility costs, King County
sewer capacity charges, required parking or amenity fees charged to the tenants of a building, or any
other mandatory fee.
Month-to-month leases are permitted for Designated Units; however, any associated month-to-month
fees are considered a mandatory fee. The fee cannot drive monthly housing costs above the Designated
Unit’s maximum gross rent.
Failure to incorporate required renter’s insurance and the Sewer Capacity Charge are the most common
errors in calculating rents. Should OH staff determine that the property owner has charged a gross rent
that exceeds the maximum allowable, a reimbursement will likely be required for the property to
reestablish compliance.
Fees for Optional Services
Fees for optional services or amenities are not counted towards the maximum rent for Designated Units;
fees for pets, for example, are acceptable. A fee can be considered optional only to the extent that the
tenant has the right to reject the service or amenity and the service or amenity is not necessary for the
tenant’s safety or the unit’s basic functionality.
Restrictions on One-Time or Up-Front Charges
The Office of Housing limits up-front fees and deposits* charged to Income Eligible Occupants.
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• Security deposits and cleaning fees, if any, must be refundable and, collectively, must not
exceed the Designated Unit’s monthly restricted rent, net of any fees or recurring charges.
• Fees for applications, transfers, pets, parking, storage, and amenities are allowed so long as a
uniform fee schedule applies to all units in the building.
• Fees for credit checks are allowed so long as a uniform fee schedule applies to all units in the
building.
• No applicant for a Designated Unit may be charged fees for income verification or reporting
requirements.
• No other fees may be charged to Eligible Households without prior written approval by the
Office of Housing. Administrative fees and move-in fees are prohibited.
*Owners/PM Staff should also consult overarching City requirements appearing at
https://www.seattle.gov/rentinginseattle/renters/moving-in/move-in-costs.
Rent Concessions
If rent or any other type of concessions are offered to unrestricted units, these concessions must also be
available to Designated Units. There are no regulations around if they must be offered as a one-time
move-in special or if they may be broken down over an extended period of time. The rule of thumb is, if
it is available to unrestricted tenants, it must be made available to all tenants.
Utility Allowances
When property owners pay all utility costs on behalf of the tenants with no subsequent bill-backs, no
rent reduction via utility allowance is required.
When tenants of Designated Units are expected to pay for any portion of their utilities, the applicable
utility allowance must be deducted from the gross rent schedule. Utility allowance schedules are
prepared by SHA and updated approximately every two years; SHA publishes the schedule here. The
deduction is required in all cases in which tenants of Designated Units must pay out of pocket for
utilities, including arrangements where utility charges are assessed through a third-party billing service.
The utility allowance will be received by the tenant as an adjustment to the maximum rent chargeable in
all cases.
Example: If a tenant moves into a studio unit on July 1st, 2019, and they are expected to pay for all utilities, the
maximum rent charged would be $1,020 (max rent) - $125 (2019 utility allowance) = $895 maximum contract
rent.
The Office of Housing will strive to notify all property management contacts when the utility allowance
changes; however, Owners/PM Staff should check the SHA website at least once every 90 days to see if
limits have been changed. Changes to the allowance must be implemented immediately for new
residents after the effective date and within 90 days of the effective date for existing residents. Utility
allowance increases will often require an adjustment (decrease) to rents, even if mid-lease. Provided
that the tenant agrees to the rent decrease, the adjustment presents no conflict with landlord-tenant
law.
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Further information on utility allowances appears on the OH website here.
Special note on Ratio Utility Billing: Ratio Utility Billing is a practice where a building will take the total
utility bill and break it down to back bill to tenants by either the number of occupied units or the
number of leaseholders in a unit. If a building chooses to use this method, the denominator must
remove any utilities caused by common area and or commercial space usage. Buildings that fail to
remove these utility charges may owe a back payment to tenants, regardless of the Utility Allowance
used.
Special note on King County Sewer Capacity Charge: The Sewer Capacity Charge does not meet the
definition of being a utility consumed by the tenant and is therefore not covered by the utility
allowance. While the fee may be passed on to the tenant, it must be deducted from the maximum gross
rent in addition to any required utility allowance adjustment. The Sewer Capacity Charge is separate
from wastewater treatment, which is usually billed by the gallon and covered by a corresponding utility
allowance if charged to the tenant. More information about the Sewer Capacity Charge can be found on
King County’s website.
Example: If the maximum rent allowable under MFTE is $1,020 (max rent) - $125 (utility allowance) -$35
(Sewer Capacity Charge), the rent that could be charged would be $860.
Required Disclosures
To ensure transparency on rent-setting practices, lease documents for Designated Units should include a
separate section or standalone lease addendum. Required rent-related disclosures appear in the
“Leases” section of Chapter 2.
Rent Increases Upon Lease Renewal
The City-published rent limit that is effective at the time of the anticipated first day of occupancy shall
establish the gross maximum rent that can be charged for a given Designated Unit throughout the term
of the lease. Upon lease renewal, and subject to any other requirements pursuant to Seattle’s landlord-
tenant laws, the Owner may adjust the rent to the maximum effective at that time, provided that the
limit has increased. In cases where the US Department of Housing and Development reports a reduction
to the area median income and the OH-published income and rent limits decrease as well, Owners shall
reduce rents accordingly upon lease renewal.
Owners/PM Staff should be aware that maximum allowable MFTE rents may vary between different
versions of the program. Year-over-year rent increases for properties participating in MFTE Program 6
are limited to no more than 4.5%. In cases where the 4.5% increase is less than the published rents for
other program iterations, OH will publish a separate income and rent chart for properties participating
in MFTE Program 6. In cases where the published rents reflect an increase of less that 4.5%, the
published chart shall apply to all properties regardless of program version.
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Chapter 7. Compliance Activities
Office of Housing Asset Management Staff will monitor compliance through the expiration of the income
and rent restrictions established under any recorded agreements; this chapter describes the major
activities that take place throughout the Compliance Period. While monitoring activities will cease at the
end of the Compliance Period, leases that are still in effect at the conclusion of the Compliance Period
must be honored until the lease expires.
For units subject to multiple overlapping incentive programs, the Compliance Period will extend to the
expiration of the program with the longest term, with income and rent restrictions adjusted as
necessary.
Compliance requirements – annual reporting, site visits, and file audits – will be in effect throughout the
Compliance Period.
Annual Property Certification Report
Owners/PM Staff must submit the Annual Property Certification Report to OH each year by January 31.
The report covers all rental activity at the property for the period of the calendar year (January 1 to
December 31), and the information presented must be able to be corroborated by the tenant files
located on-site.
The Annual Property Compliance Report will be reviewed by OH staff by May 31. During this time, staff
will make a determination of compliance with program requirements based on a review of the report(s).
The review will address, at minimum, the following criteria.
• Actual Designated Units align with the most recent OH-approved roster of Designated
Units
• Household incomes fall under the OH-published limit for the governing Area Median
Income percentage as adjusted for household size
• Annual incomes at recertification are within the applicable income limit
• Gross rent charged, inclusive of any mandatory fees, is at or below the maximum gross
rent
• Correct utility allowances are utilized
• Demographic data for households have been recorded
• Extended vacancy has been reported and addressed, including completing the
Affirmative Marketing Supplemental Report
The Property will receive a Performance Letter detailing any findings, areas of concern, and any
necessary follow up actions.
When OH determines the submitted report and/or corrective actions taken based on report findings are
satisfactory, OH will issue a current Certificate of Compliance.
In the event OH is unable to complete a review of the submitted report, it will not issue a new
Certificate of Compliance. OH will however continue to consider the project to be in compliance until it
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reviews a subsequent Annual Property Compliance Report. In these instances, the status of the
residential property tax exemption will remain unchanged.
Site Visits, Audits, and File Review
The Office of Housing will schedule the first on-site tenant file review within the first six months of the
Compliance Period. The primary purpose of this initial file review is to ensure that new properties are
correctly qualifying and documenting income-eligible households. OH will work with the landlord to
correct any deficiencies related to:
• Tenant backup documentation
• Inconsistencies with annual report
• Incorrect income verification determinations
OH will place projects on a review cycle based on the level of compliance and accuracy of the annual
report and results from the initial on-site file review. Criteria used to determine the review cycle for an
individual property includes:
• Failing to submit the Lease-up Report
• Lease-up Report submitted does not reflect tenant files (if requested)
• Failing to income-qualify or income-verify households occupying Designated Units
• Tenant files missing required supporting documentation
• Failing to properly designate and lease the appropriate number of Designated Units
• Actual Designated Units differ from pre-approved Designated Units, or evidence
substantial differences in comparability or distribution as confirmed during the prior
annual reporting cycle
• Failing to charge rents that all within maximum allowable gross rents for Designated
Units
• Other criteria as determined by OH.
Interim Site Review
If issues arise during the course of the year, an interim on-site review or request for tenant file
documentation may be required as often as OH staff deem necessary.
What Is in a File
The tenant income certification files are reviewed by OH Asset Management staff and State Auditors
during a file audit. Files will consist of mandatory forms as well as situational forms. The file given to the
Compliance Liaison should consist of final iterations of documents only.
Mandatory Forms for Every File
1. Tenant Income Certification (TIC)
2. Calculation Worksheet
3. Income Declaration (ID)
4. Demographic Form
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5. Lease Rider
Situational Corresponding Documentation
1. Income
a. Wage information
b. Self-Employment information
c. Non-employment/Unemployment information
d. Gift information
e. Fixed Income
i. Social Security
ii. Public Assistance
iii. Child Support
f. Student Income Information
2. Assets
a. Checking and Savings
b. Retirement Accounts
c. Stocks/Bonds/Investments
d. Real Estate
3. Student Status
4. Reasonable Accommodation Approvals (only if the reasonable accommodation is in direct
relation to an Incentive Program policy or regulation)
File Set Up Best Practices
The goal of an audit is to have the auditor agree with and understand your calculations, agree with who
was approved to move in or who was denied, and to exit your building with no follow up questions or
concerns. A file is the “story” of your tenant, so it should be easily readable and points should easily
connect so that anyone reading it will come to the same conclusion.
• Follow the outline above when setting up a file. This makes it consistent for auditors so that
they can easily locate information as well as reduce the occurrence of missed information.
• Do not include co-signer information in the tenant income certification packet. In the case of a
co-signer/guarantor, keep all of their documentation in a separate location, tab, or separated
with a colored piece of paper clearly labeled “co-signer/guarantor.”
• Consider labeling/tabbing specific forms, using highlighter to specific figures used, or write on
the forms in a red pen why a figured was used instead of another. If an auditor has a question, it
will generate follow up.
• Consider having someone who did not complete the packet review and construct the packet.
The second set of eyes helps to ensure that another person who does not know the story can
easily read the story in the file.
• Many properties have company policies that every version of every form should be kept. In
these cases, we ask that those copies be held either separately, or at the end of the packet
behind a “Drafts” notification. Unfinalized documents lead to miscalculations and questions
resulting in unneeded audit findings.
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• It is a good idea to pre-audit all of your own files. This helps to ensure that you identify missing
documentation prior to the arrival of an auditor. Make sure that page two of the TIC matches
your lease and ledger.
• After the purchase of a building or the change in management company, it is always a good idea
to go through and make sure that the files are complete and accurate. A pre-audit that identifies
missing items is easier to complete than a City audit that has strict timelines for tenant provided
data.
Rounding
When entering financial figures into the TIC, apply standard rounding practices so that whole numbers
are being used on the final figure.
Scope of Review
On-Site Review Scope
• For the first on-site review (occurring in first 6 months), all tenant files will be reviewed.
• For in-cycle on-site reviews, a minimum 30% or 15 current tenant files will be reviewed,
whichever is higher. For properties with fewer than 15 units, all tenant files will be
reviewed. The Office of Housing may review more files at their discretion.
• Interim on-site file review does not require that a minimum number of current tenant
files be reviewed.
• In cases where a percentage of units are reviewed, a representative sample of units will
be chosen by OH staff through a random sample stratified by unit type (studio, 1-
bedroom, 2-bedroom, etc.).
On-Site File Compliance Review: Designated Units
Owners/PM Staff must have the following documents available on site during the on-site review:
• All current resident files, containing:
o Signed ID on file that demonstrates the household has declared all sources of
income
o Income verification forms that support the income disclosed in the ID
o Signed TIC that shows all final figures from the income verification process,
including calculations. Properties may use the income calculation available in
the TIC workbook or their own tools, however notes should be made for clarity
when needed.
• All current resident leases
• Copy of current lease template used for market-rate tenants and addendums given to
residents
• In the case of multiple extended vacancies, a copy of Special Outreach for Affirmative
Marketing form for Incentive Programs with Affirmative Marketing requirements
• All files for applicants who were denied (did not income qualify or were otherwise
denied)
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• While properties were encouraged to use WSHFC’s compliance forms in the past, OH
forms are required as of 10/1/2015. As long as adequate income documentation is
available for units leased prior to this date, there is no need to request additional
documentation from current tenants. Please collect this documentation going forward.
The on-site tenant file compliance reviews will focus on the following areas:
• Completeness of ID
• Required household income and asset verifications
• Completeness and accuracy of TIC, including:
o Income and rent maximums
o Utility Allowance in accordance with SHA’s published Utility Allowance Schedule
o Calculations of maximum rents, including utility allowance and any mandatory
fees deducted
• Alignment between actual Designated Units and those listed on the Annual Compliance
Report
• Satisfactory backup for utility allowances
• Mandatory fees are being accounted for in the rent calculations
• Most recent report (Lease-up or Annual) information is accurate based on contents of
tenant file
• Annual reports submitted to OH should reflect documentation available in the TIC
Non-Compliance
The Office of Housing will notify the Owners/PM Staff of any instances of non-compliance identified
during an Annual Report review or site visit. The notification will give direction on steps to bring the
property back into compliance, including corrective actions and requirements that the Property
demonstrate that deficiencies have been cured by a certain due date.
The following are specific issues of non-compliance and the corresponding corrective action OH will
require the project to take:
Tenant household over-income at move-in.
Approving an over-income household to move into a “restricted” unit automatically triggers OH’s Next
Available Unit rule, which requires an additional, comparable unit to be newly restricted.
Even after that new unit is designated, the unit occupied by an over-income household must continue to
be treated as restricted until the date on which that household’s tenancy ends. Efforts, active or passive,
to coerce the household to vacate the unit are strictly prohibited. The property owner must immediately
provide OH’s notice of the ongoing restrictions and terms to the unit’s tenant household.
The following is required until the over-income household’s tenancy voluntarily ends:
• Monthly housing costs must remain at or below the applicable %AMI limit;
• Income recertification must be completed annually for that tenant household;
• Annual property certifications must reflect as “restricted” both the unit occupied by the over-
income household and the additional, comparable unit newly designated according to the “next
available” rule and include all information required as such; and
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• Ledgers must be submitted to OH proving that the over-income household’s rent is at or below
the amount allowed per the applicable %AMI limit.
Under no circumstances may a unit’s status change from restricted to market without prior approval by
OH. That approval is conditioned on full compliance with recorded regulatory agreement(s).
OH may approve a specific restricted unit to lease at market rent after it is vacated or upon renewal of
the lease, if applicable, provided that:
• The number of units leased at restricted rents exceeds the minimum required per the recorded
agreement(s); and
• One of the following applies:
o An over-income tenant household has notified the property manager of their voluntary
intent to move-out of a restricted unit; or
o The annual income of a tenant household that was over-income at move-in is
determined by the property manager and OH to exceed the recertification limit for a
restricted unit.
Missing or incomplete household income certification documentation.
Missing or incomplete income certification documentation for a tenant household in a “restricted” unit
automatically triggers OH’s Next Available Unit rule, which requires an additional, comparable unit to be
newly restricted.
Even after that new unit is designated, the unit occupied by a household for whom satisfactory income
certification documentation has not been provided must continue to be treated as restricted until the
date on which that household’s tenancy ends. Efforts, active or passive, to coerce the household to
vacate the unit are strictly prohibited. The property owner must immediately provide OH’s notice of the
ongoing restrictions and terms to the unit’s tenant household.
The following is required until the household without satisfactory income certification voluntarily ends
their tenancy:
o Monthly housing costs must remain at or below the applicable %AMI limit;
o Income recertification must be completed annually for that tenant household;
o Annual property certifications must reflect as “restricted” both the unit occupied by the
uncertified household and the additional, comparable unit newly designated according
to the “next available” rule and include all information required as such; and
o Ledgers must be submitted to OH proving that the uncertified household’s rent is at or
below the amount allowed per the applicable %AMI limit.
Under no circumstances may a unit’s status change from restricted to market without prior approval by
OH. That approval is conditioned on full compliance with recorded regulatory agreement(s).
OH may approve a specific restricted unit to lease at market rent after it is vacated or upon renewal of
the lease, if applicable, provided that:
o The number of units leased at restricted rents exceeds the minimum required per the
recorded agreement(s); and
o One of the following applies:
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A previously uncertified tenant household has notified the property manager of
their voluntary intent to move-out of a restricted unit;
Within 12 months of move-in, the annual income of a previously uncertified
tenant household is determined by the property manager and OH to be no
higher than the limit upon which lease of a restricted unit is conditioned; or
The annual income of a previously uncertified tenant household is determined
by the property manager and OH to exceed the recertification limit for a
restricted unit.
If the property fails to respond or make the corrections necessary, OH will issue a Notice of Non-
Compliance to the Owner.
In the case of the MFTE program, a failure to cure deficiencies within 30 days of this Notice of Non-
Compliance may result in OH notifying the King County Assessor’s Office to remove the residential
property tax exemption benefit. In the case of cancelation of the exemption, Owners/PM will be
required to maintain affordable rents through any tenant’s lease term. If Owners/PM Staff elect to
increase rents beyond MFTE limits at the end of the lease term due to cancelation of the exemption,
they must provide MFTE tenants with sufficient notice that the MFTE agreement is no longer in effect
and a resulting rent increase is pending.
A property that has an MHA or IZ covenant that is not performing in accordance with the signed
agreements may be subject to legal action by the City.
Changes in Ownership/Management
Owners must communicate with OH staff prior to any transfer of ownership or sale. Owners must also
notify OH staff in the event of a change in property management companies. Property management
companies must notify OH staff of new contact information should a position change.
Record Retention
Owners/PM Staff may establish their own protocols for retaining digital or hard copy files so long as all
records can be readily produced for OH review upon request. All records must be kept for no fewer than
7 years after a tenant’s application denial or move out.
To eliminate confusion, Owners/PM Staff should build permanent files that include only final
documents, not earlier drafts. Prior iterations of documents and extra copies of correspondence should
be kept separate from the final income certification file.
Compliance Fees
The Office of Housing will levy annual compliance monitoring fees on properties depending on Incentive
Program; the fee schedule, if any, is specified in the governing agreements between the City and the
Property Owner. As of 2020 no fees are levied for projects participating solely in the MFTE program or
for Designated Units required under the City’s Tenant Relocation Assistance Ordinance (“TRAO”). Per-
unit fees are levied on Designated Units that are restricted under the performance option for either
MHA or IZ.
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Annual compliance monitoring fees are payable to OH. The Office of Housing will send invoices to
properties by May 1 each year with payment due no later than June 30
of that year.
Publicly Funded Projects
Properties in which Designated Units are governed not only by Incentive Program agreements but also
affordability requirements that attach to public funding will be monitored to the most restrictive
affordability limitation that applies to the Designated Units.
• Properties that have received City of Seattle funding. Properties in the OH loan portfolio will be
monitored in accordance with procedures that accompany any other City-funded project.
• Properties that have received financial support from other public funders (e.g., the Washington
State Housing Finance Commission (WSHFC) will be monitored by WSHFC. Publicly funded
properties need only to complete the WBARS annual report and not the OH Annual Property
Certification Report. However, if the public funder determines that a Property is not meeting its
requirements, OH will begin monitoring activities to determine if the Property is also not
meeting its obligations under the Incentive Program.
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Chapter 8. Expiration of Unit Affordability Requirements
Compliance Period
The term of affordability and associated Compliance Period varies by Incentive Program.
• MFTE: The affordability term for Designated Units under the MFTE program expires on
December 31 of the twelfth year of tax exemption. The requirement to provide Designated
Units does not extend for 12 years from the date of initial occupancy, but rather from the first
year of the tax exemption.
o Example: A building receives its Final Certificate of Tax Exemption approval on June 15, 2020, at
which point the Compliance Period commences. The tax exemption period will not start until
January 1, 2021; the obligation to provide Designated Units will extend until December 31, 2032
absent an earlier affirmative decision by the Property to no longer receive the exemption.
• IZ: The affordability term for Designated Units under the IZ performance option expires 50 years
after the latter of the Property’s Certificate of Occupancy or execution of the Bonus Covenant.
• MHA: The affordability term for Designated Units under the MHA performance option expires
75 years after Certificate of Occupancy is received by the building.
• Standalone Agreements: Affordability terms will vary under other programs, standalone
development agreements, etc.; in all cases the agreement(s) establishing the affordability
obligation will govern the term.
Program Extension
The City of Seattle began allowing expiring MFTE P3 projects to extend for an additional 12 years. In
order to extend, the project recertifies all existing MFTE households to determine their new eligibility
level. There are three possible scenarios for each household that depend on their new certified income:
1. The household qualifies at a lower income level and gets bumped to the P6 program. The
household is now considered a P6 household for the life of its tenancy, including the lowered
rent caps and the lower income levels that trigger ineligibility. It cannot ever return to P3.
2. The household does not qualify for the lower P6 level but is still low enough to remain a P3
household. The household remains a P3 household unless during a subsequent recertification, it
certifies at an income level low enough to bump it into the P6 program. Then, the household is
now considered a P6 household for the life of its tenancy, including the lowered rent and lower
income levels that trigger ineligibility. It cannot ever return to P3.
3. The household is over income for P3 or the household refuses to certify. In these instances, the
household is now considered ineligible. The project will notify the household, the unit will turn
to Market and the project will apply the Next Available Unit rule
Example #1. Unit 101 certifies at the P6 income level. Effective Jan. 1 the unit will need to have new P6
rent limits in place. Unit 101 recertifies annually and will continue to remain so long as their income
remains below 150% of the P6 max limit.
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Example #2. Unit 201 certifies at the P3 income level. P3 rent limits remain in place. Unit 201 recertifies
every year, never really changing until they move out. Unit 201’s next household will then need to
qualify under P6 rent and income limits.
Example #3. Unit 301 certifies at the P3 income level. P3 rent limits remain in place. At the next
recertification, Unit 301’s income has gone down significantly enough to qualify them for a P6
designation. At the lease anniversary, the unit will need to have new P6 rent limits in place. Unit 301
continues to recertify annually and will continue to remain so long as their income remains below 150%
of the P6 max limit.
Expiration
Prior to expiration, OH will alert project owners of any extension opportunities. If no opportunities are
available or if the owner elects not to extend, property managers will need to do the following:
• Contact the Seattle Department of Construction & Inspections (SDCI) alerting them to the
change in program and to determine if there will be any Tenant Relocation Assistance Ordinance
(TRAO) requirements.
• Provide notice to the tenants of the Designated Units regarding the end of the program and
what options they have for remaining in their unit including whether or not TRAO assistance will
be available. If TRAO assistance is available, owner shall provide information on how to apply for
it.
• Honor the rent as stated in the signed and effective lease for tenants of the designated units. In
no case may the expiration date of a designated unit supersede the terms of an effective lease.
Affordability Terms vs Effective Leases
Property managers must plan for the expiration of the Program affordability period. Property Managers
must:
• Honor the rent as stated in the signed and effective lease for tenants of Designated Units; in no
case may the expiration date of an affordability term supersede terms of an effective lease.
• Provide notice of an increase of rent pursuant to the local and state laws or requirements.
• Provide notice to the tenants regarding the end of the Program.
Change of Use
Demolishing or converting a Property to nonresidential use does not absolve the Owner from meeting
Incentive Program requirements, which typically run with the land. Owners/PM Staff must notify their
Compliance Liaison of any planned change of use to determine follow-up actions in accordance with
governing Code and program agreements. Owners/PM staff must contact SDCI to determine if a Change
of Use license is required.
As with expired term projects, a change of use may trigger TRAO. Owners/PM staff will need to contact
SDCI to determine if this is the case.
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Final Report
Following the expiration of any Incentive Program, including standalone projects with affordability
requirements subject to development agreements or other instruments, the Property must complete a
final Annual Property Certification Report. This report is due no later than January 31
of the year
following the expiration.
OH will review the report and issue a final Certificate of Compliance that will serve to close the
compliance period and sunset the residential property tax exemption period. Should the owner desire to
update any title report or other documents mentioning the expired tax exemption, it will be at the
owner’s expense.
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Appendix A. Income and Asset Verification and Calculation
This appendix to the Affordable Housing Incentive Program Compliance Manual inventories the common
types of income (Section 1) and assets (Section 2) and explains how Owners/PM Staff shall verify and
otherwise account for each type of income and asset for purposes of determining a prospective tenant’s
eligibility to rent a Designated Unit.
The following appendix provides real-world examples of how the calculations should be performed.
Section 1. Income
Below are several categories of income that are commonly found on applications. Sections 1 and 3 of
the HUD occupancy Handbook 4350.3 is used as a guide, however, OH determines the final decision on
what is considered income for the Programs and what verification is required to determine eligibility.
Generally, Owners/PM Staff must use current circumstances to anticipate projected income. This
includes a review of income received over the prior 6-month period to confirm/predict if recent income
should be anticipated.
The below list is not exhaustive, but a good guide for most income situations.
Wages
Wages are funds received in exchange for working for an employer. A person earning wages would
receive a W2 at the end of the year for tax purposes.
This is the most common form of income. When determining wages, you will include all regular wages,
premium pay, tips, shift differential, overtime, training, and bonus pay.
• Verification: Obtain 3
rd
party verification
o Verification of Employment (must be complete) and most recent paystub.
o Employers may also require The Work Number verification. This is not required for
properties to utilize this service.
o If neither option above is available collect 6 current and consecutive pay stubs
• Note: While it is not required, best practice is for Owners/PM Staff to collect a single pay stub to
cross reference information provided on the Verification of Employment Many owners/PM’s go
a step farther and collect the six most recent consecutive statements up front to minimize
potential delays resulting from non-responsive employers.
Determining income for regular fulltime employment, the following figures are used:
• Hourly wages by 2080
• Weekly wages by 52
• Bi-weekly wages by 26
• Semi-monthly by 24
• Monthly wages by 12
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The Household Eligibility Certification Excel (Tab 2-4) workbook offers three different methods of
projecting income.
1. Annualized Periodic Income: Complete this table with the information as obtained through the
3
rd
Party Employment Verification. There are lines to input any commission, tips, or raises. This
can also calculate annual income from monthly sources such as Social Security or gift income.
2. Annualized Periodic Income by Paystub: Complete this table when an applicant supplies 6
consecutive paystubs. Pay Period Length will be required to indicate whether the income is paid
weekly, bi-weekly, bi-monthly etc.
3. Annualized Year to Date (YTD) Income: This table is used when YTD is obtained via 3
rd
Party
Employment verification OR when paystubs are available, and it is verified the income began on
or before January 1 of the given year.
All tables should be as complete as possible given the verification received. For instance, if 3
rd
Party
Employment Verification was received table #1 and table #3 should be completed and the highest
calculation used as the annual income.
Annual/Projected Increases (Raises)
A pay raise that the applicant will receive within the certification year must be included when
determining income. If an employer indicates a possible range (e.g. 2.4%) the highest amount (4%)
would be used in projecting increases.
A Cost of Living Adjustment (COLA) is received by many employees who are employed in the public
sector such as teachers, police, nurses and medical staff, City and government staff, postal carriers, etc.
COLAs often range between 2 and 4% and are effective on the 1
st
of the year.
Overtime
If an employer indicates on the 3
rd
Party Employment Verification form that employee works overtime
and a range of hours is given (e.g. 3-5 hours per week) and efforts to clarify with the employer fail, apply
the highest amount (e.g. 5 hours) to calculate annual income. Overtime is also seen on pay stubs.
• Verification: Overtime should be confirmed via the 3
rd
Party Employment Verification form
and/or reviewing paystubs for an overtime line item.
Bonuses and Commissions
If an employer or pay stub indicates the applicant receives bonuses or commissions, determine the
frequency of these sources and annualize.
• Verification: Employers may report bonuses or commissions on the 3
rd
Party Employment
Verification form. If this information is not available from the employer review six (6)
consecutive paystubs OR use projected bonuses or commissions available on the annualized
income calculation tool of the TIC.
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Tips
Income received from employment including but not limited to, service or gaming industries. If an
applicant works in an industry that generally uses a tip model such as food service, tips must be factored
in unless the applicant can provide official documentation from their employer (preferably the HR
department or employee handbook) stating explicitly that their position does not receive tips or patron
gifts.
• Verification: Employers may report tips on the 3
rd
Party Employment Verification form. If this
information is not available from the employer review six (6) consecutive paystubs for tips
information OR use projected tips available on the annualized income calculation tool of the TIC.
Year-to-Date
The YTD should be included on the 3
rd
Party Employment Verification form. If not and you are unable to
clarify with the employer, utilize the YTD on the most recent pay stub and calculate the income
projection so long as the start date is verified on another pay stub and/or the beginning date of the first
pay period of the current calendar year is verified on another pay stub. In some cases, this may require
collecting an additional pay stub. it is demonstrated that the applicant had been employed since the
beginning of the YTD period.
New Job
If an applicant does not have a current job, or has been hired but not started yet, collect an offer letter
and use the information in the letter to forecast income. This letter must include start date, pay rate,
and hours worked per week. Factor in any commission, bonuses, etc. whenever possible.
EXAMPLE
An Employment Verification form has been received for an applicant with the following information:
• First Date of Employment: 11/1/2019
• Current Gross Wages/Salary: $20/hr
• Average Hours Worked per Week: 30-35
• Frequency: Per Hour
• Year to Date Earnings: $10,045, From 1/1/2020 to 3/15/2020
• # of Pay Periods included in YTD: 5
• Overtime: $0
• Shift Differential: $0
• Commissions, Bonus, Tips: $1200 per month
• Included in YTD above: Yes
• Raises anticipated in the next 12 months: 3%, effective 11/1/2020
• Participates in 401(k): No
• Can Access 401(k): No
Given this information the Annualized Income calculation and the YTD calculations should both be used
and the higher. The below calculations show the YTD as the highest and this is what would be entered
into the TIC.
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An Employment Verification is not received by the employer, after two attempts 6 consecutive paystubs
can be used as detailed below:
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You should complete as many calculations as the information you have been provided will allow, and no
less than 2. Always use the highest calculation on the TIC to determine income eligibility.
Self-Employment
Self-employed individuals file a tax return in order to report their income.
Net income from business that is owned/operated by the applicant is what is used for the final income
projection. This includes freelancing contractors, taxi and ride share drivers, etc.
• Verification: The applicant must complete the Self Employment Form.
• If the business is established, the applicant must provide the previous year’s tax return,
including the Schedule C (Profit and Loss) of the tax return. If the previous year’s return has not
been filed, the year before that’s return will suffice so long as it isn’t after April 15, unless the
applicant can provide proof they have filed for an extension. For example, if it is May 1, 2023,
and the 2022 tax return has not been filed, the 2021 tax return will suffice only if the applicant
can supply proof they have filed for an extension for the 2022 return.
• If the business is new a Profit and Loss should be obtained. These are downloadable accounting
forms that can be completed by an applicant or their CPA.
• When determining net income, use best judgement on deductions. It would be reasonable for a
taxi driver to deduct vehicle depreciation. It would not be reasonable for a credit repair
specialist who works from home to deduct vehicle depreciation as their business does not
require the use of a vehicle.
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• Note: It is not required to review business account bank statements, unless there is a concern
for fraud/accuracy, or there are significant transactions between business and personal
accounts.
Contract Work
Contractors pay is a sum of income paid for completing a specific job or series of jobs. A person who is a
contractor, will receive a 1099 at the end of the year for tax purposes. Income reported on a 1099 is
gross income. It is up to the person to take care of all of their own expenses and taxes.
• Verification: An individual who is a contractor will complete the same process as a person who is
self-employed including providing a profit and loss statement.
EXAMPLE
Household member is a Uber driver who makes $5,000 in gross monthly income, the business has
monthly expenses of $1,000 (gas, car washes, oil changes), the expenses are deducted from the monthly
gross amount and the net income of $4,000 is used as the actual monthly income.
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Seasonal Employment
Applicants employed in seasonal work such as construction, tax preparation, etc. and may collect
unemployment benefits during their off months.
• Verification: If the applicant is currently not employed at their seasonal employment the Non-
Employment form should be completed. Income should be projected by the applicant using data
from their past seasonal employment or market averages. If the household is receiving
unemployment obtain a pay statement or award from Washington Employment Security
Department.
Unemployment
Weekly income from the state Employment Security Office after the loss of employment. As individuals
may apply for appeals and extensions, the weekly benefit amount shall be multiplied by 52.
• Verification: Complete the Verification for Unemployment. If ESD does not respond, you may
accept a print off from the applicants Secure Access Washington (SAW) account.
EXAMPLE
An applicant receives unemployment benefits totaling $567/week. Total unemployment income for the
year will be $29,484 ($567 x 52 weeks). Utilize the Annualized Periodic Income section on the TIC
Income tab to perform the calculations and include in the certification file.
Gift Income
Gift income is considered countable income and is applied to the annual gross income for the
household. Any gifts received by an applicant over the last 6 months shall be annualized and included in
their income calculation. If a one-time gift is in the amount of $1,000 or greater it shall be annualized
and included as income.
• Verification: The gift giver shall complete the Gift Affidavit. The person(s) giving the gift must
complete the form outlining how often gifts are given and sign.
o If the person(s) giving the gift resides in the United States, the form must be notarized. If
possible, the Gift Affidavit should be notarized, regardless of whether the gift giver is
foreign or local.
o If the person(s) giving the gift resides outside of the United States and no other notary is
possible the gift giver must supply a copy of their identification along with the signed
gift affidavit.
EXAMPLE
An applicant receives gifts to assist in starting a business and living expenses. A 6-month lookback
demonstrates that the applicant has received $10,000 in this gift income. The $10,000 would be
annualized ($10,000 x 2 = $20,000) and included as income under “Other Source” on the TIC.
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No Longer Receiving a Gift
If an applicant has historically/recently received gift income, that income will be counted going forward
unless a full 6-month period has passed without receiving that gift. If an applicant’s gift income puts
them over the income threshold for a particular unit, the applicant must discontinue the gift and wait 6
months if they wish to reapply. If an applicant states they will cease receiving a gift solely to qualify for a
Designated Unit, they must wait 6 months before reapplying without the gift income.
Student Income
Students often have a variety of income sources to support the cost of their education and in some
cases living expenses. Below is a list of exempt and non-exempt student income sources:
Exempt Student Income (document in file but do
not include in income projection)
• Pell Grant, State Need Grant
• Subsidized & Unsubsidized loans
• Earnings from work study
• GI Bill funding
Non-exempt Income (include in income projection)
• Support from family members,
including paying rent
• Government support received by
International Students
• Regular earnings from employment
that is not work study
• Stipends that are not a part of the
financial aid award package
• Verification: Applicant completes the Student Status Certification and provides the
following:
o FASFA or WASFA worksheet for the current school year (during the summer months
the coming school year)
o Registration/Class Schedule detailing tuition and fees charged
o Financial Aid award letter from school of attendance
o F1 in cases where student is international student
• Recording: Non-Exempt income should be recorded on page 1 of the TIC. Exempt income
should be documented to the file but is not listed as income on the TIC.
EXAMPLE
Student household member is an international student and is able to provide a F-1 or J-1award letter.
Under “Personal funds” is listed $51,056 these sources shall be counted in full towards the household’s
income.
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TANF & ABD
Monthly income to support low-income families administered by Washington State Department of
Social and Health Services (DSHS).
• Verification: Send Public Assistance Verification to DSHS. After 2 documented attempts obtain
DSHS letter of award addressed to applicant.
o Food Assistance is exempt and not counted towards income.
EXAMPLE
Household member receives TANF maximum amount of $363 per month for a family size of 2 people,
$363 x 12 = $4,356 annually.
Household member receives ABD in the amount of $197 per month, $197 x 12 = $2,364 annually.
In both cases, utilize the Annualized Periodic Income section on the TIC Income tab to perform the
calculations and include in the certification file.
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Seattle Housing Authority Section 8 Voucher Holders
OH allows the Calculation Summary to be used in lieu of all other income verification documents*.
• Verification: Section 8 Calculation Summary form. Must be no older than 120 days from the
lease start date. Property must contact Case Manager to confirm the Calculation Summary is
current and correct. If the household has provided SHA with an update, the property will require
SHA to provide an updated Calculation Summary to the applicant for verification.
Transfer income totals, not including any noted deductions, from the Calculation Summary into Part III
of the TIC. If assets have been included on the Calculation Summary, transfer those amounts into Part
IV of the TIC.
EXAMPLE
Using the above Calculation Summary, enter $18,000 into Part III and $251,619 into Part IV of the TIC:
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*This is for initial certification ONLY. The Calculation Summary may not be used in lieu of income and
asset verification documents for recertifications.
Social Security
Monthly income from the Social Security Administration (SSA), including pension, disability, SSI, survivor
benefits. This includes benefits for minors.
• Verification: Current year’s award letter issued from Social Security Administration stating gross
monthly benefit.
EXAMPLE
Household member receives $783 per month in SSI
Move-in date is October 1, 2020.
Calculate income from Move in Date to end of year (3 months) $783 x 3 = $2,349
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Apply Cost of Living Adjustment (COLA) of 3% to determine payment as of 1/1/21, $783 x 1.03 =
$806.49, rounded to $806. for all months in 2020.
There will be 9 months of receiving $806 (1/1/21 - 9/30/21), therefore $806 x 9 = $7,254
Add the 2019 projected amount and the 2020 projected amount during the certification year, $2,349 +
$7,254 = $9,603. Utilize the Annualized Periodic Income section of the TIC Income tab as such to
calculate and include in the certification file.
Pensions
Monthly income from employment related retirement pensions, disability or death benefits, or other
similar periodic income, including Veterans Admin benefits (disability or retirement)
• Verification: Current monthly benefit statement or current year award letter stating gross
monthly benefit.
EXAMPLE
The Household member receives $1,645/month from their pension.
Pension $1,645 x 12 = $19,740.
Utilize the Annualized Periodic Income section of the TIC Income tab as such to calculate and include in
the certification file.
Alimony and Child Support
Monthly or other recurring income for the care of a child or continued support from a former spouse.
• Verification: One of the following:
o Alimony: Separation Agreement/Divorce Decree with amount of Alimony OR notarized
letter from former spouse paying support
o Child Support: MFTE/IZ Child Support Affidavit
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AND print out from DSHS/Office of Support Enforcement OR notarized letter
from parent paying support.
EXAMPLE
An applicant reports receiving child support directly from the non-custodial parent. The non-custodial
parent provides a notarized statement that they provide monthly support in the amount of $400.
$400 x 12 = $4800 annually.
Utilize the Annualized Periodic Income section on the TIC Income tab to perform the calculations and
include in the certification file.
Military Pay
Military income is paid on a semi-monthly basis. The Leave and Earnings Statement (LES) verifies Base
Pay, Basic Allowance for Subsistence (BAS) and Basic Allowance for Housing (BAH). Base Pay and BAH
are included as income. BAS is considered exempt income but should be entered on the 3
rd
page of the
TIC.
Non-Exempt Income (Count on Page 1 of TIC)
Exempt Income (Record on Optional Page 3 of TIC)
• Basic Pay
• Basic Allowance for Housing (BAH)
• Family Separation Allowance
• Basic Allowance for Subsistence (BAS)
• Clothing Allowance
• Dislocation Allowance (DLA)
• Family Subsistence Supplemental
Allowance
•
Combat Pay
• Verification: Two consecutive LES statements stating gross pay. If receiving other income two
consecutive statements to verify gross income.
EXAMPLE
The LES on the following page provides the Base Pay of $2,247.30, BAS of $294.43 and BAH of $1725.00,
each paid semi-monthly.
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Base Pay $2,247.30 x 24 = $53,935.20.
BAS $294.43 x 24 = $7061.76 This income is exempt and will not be recorded on the TIC or used for
eligibility determination.
BAH $1750 x 24 = $42,000.
Annual Base Pay + Annual BAH = $95.935.20.
Utilize the Annualized Periodic Income section of the TIC Income tab as such to calculate and include in
the certification file.
Selling of Goods
Income received by selling goods and not being considered self-employed. If the applicant does report
the selling of goods to the IRS as a business, they would be considered self-employed. See Self
Employment section above.
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• Verification: Deposits made into the applicants checking, savings or other digital forms
(Venmo/PayPal/CashApp)
VENMO/PAYPAL/CASHAPP
Deposits from online cash apps such as Venmo, PayPal or similar. Often these deposits are due to the
repayment of a loan or the splitting of a bill, however it is also very common that these payment
channels are used to pay for goods or services. If an applicant has deposits of these nature, they shall be
counted and projected forward unless the applicant can provide supporting documentation to show
that this is not the case. The account statements often show what the payment is for. Applicants may
also include receipts connecting payments to repayments.
• Verification: Six (6) consecutive months statements from each source reviewed for recurring
deposits that should be included as income. Applicants should make statements and provide any
substantiating documentation for deposit larger than $300 and claimed to be repayment (such
as rent splitting, vacation splitting, etc.).
• To calculate income, annualize anything identified as income.
Rental Income
Monies received for rent of a property owned or co-owned by applicant. This includes money given
directly to the applicant or directly to the mortgage holder of the residence.
• Verification: Applicant completed Real Estate Valuation form and IRS Form 1040 with Schedule E
(Rental Income) and a statement from lessee or a copy of the Lease Agreement.
The Real Estate Valuation form has embedded formulas and includes instructions on where to input
data into the TIC.
Rental Income will need to be extracted from the Schedule E in order to be entered into Part III of the
TIC as Other Income.
Employee Rent Concessions
Monthly discounted rent for employees of the owner or property management company. As rent
discounts are a common add on in company compensation packages, employees who lease a
Designated Unit must include any rent reduction, discount, or credits towards their overall income
calculation. This monthly discount shall be a separate line item listed with wage income. See Chapter 3
regarding the administration of these units.
• Verification: Rent ledger for applicant-employee that demonstrates the monthly discount in
rent. This is included as income.
EXAMPLE
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The Household member receives $700/ month in rent credit.
Rent Credit $700 x 12 = $8,400.
Utilize the Annualized Periodic Income section of the TIC Income tab as such to calculate and include in
the certification file.
Income Changes – Recent Changes to Income
Applicants may not lower their hours and/or quit their jobs to income qualify for a rent restricted. If an
applicant is found to have affected their income solely for the purpose of income qualifying for the
Affordable Housing Incentive Programs, they may not reapply for the program for a minimum of 6
months.
Changes in income are seen by looking at income retroactively for the prior 3 months. If there is a
question or concern about hours worked and/or additional employment contracts, Owners/PM Staff
may request a statement from the Employment Security Office which notates hours claimed to the State
for employment/wage/tax purposes.
Trusts: When the Applicant is the Beneficiary.
• Verification. Disbursement statement.
Utilize the Annualized Periodic Income section of the TIC Income tab as such to calculate and include in
the certification file.
EXAMPLE
The applicant provides a statement that shows they receive $1,500/month from their trust.
$1,500 x 12 months = $18,000.
Utilize the Annualized Periodic Income section of the TIC Income tab as such to calculate and include in
the certification file.
When the applicant is the grantor of a trust, please refer to page 66.
Additional Income Information
LIVE IN AID
If a property management approves a Reasonable Accommodation for a Live-in Aid, or if the Housing
Authority approves a Live In Aid for a voucher holder, property management shall not include the
income for a live in aid. It is the buildings responsibility to screen potential live in aids.
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INCOME FROM MINORS
Wages from minor shall be exempt and not counted toward household income. However, TANF, Social
Security, Trust disbursements, etc. shall be counted toward household income.
• Verification: See each individual example above.
• Recording: Non-Exempt income should be recorded on page 1 of the TIC. Exempt income should
be recorded on the Optional Page 3 Exempt Income form for the TIC.
FOSTER CARE INCOME
Foster care income is public assistance in return for the care of a child in the foster system.
• Verification: Complete a Public Assistance Verification and submit to DSHS or the private agency
providing services
• Recording: Non-Exempt income should be recorded on page 1 of the TIC. Exempt income should
be recorded on the Optional Page 3 Exempt Income form for the TIC.
INCOME FROM TEMPORARILY ABSENT FAMILY MEMBERS
Owners must count all income of family members approved to reside in the unit, even if some members
are temporarily absent. If the owner determines that an absent person is no longer a family member,
the individual must be removed from the lease and household composition.
If the spouse or a dependent of the person on active military duty resides in the unit, that person’s
income must be counted in full, even if the military member is not the head, or spouse of the head of
the family. The income of the head, spouse, or co-head will be counted even if that person is
temporarily absent for active military duty.
LUMP SUM RECEIPTS
Lump sum amounts are generally not included as income but treated as an asset. This includes, but is
not limited to, inheritances, one-time lottery winnings, insurance settlements or lump sums due to a
delay in certain benefits, e.g., Unemployment or Social Security. However, if the income is expected to
continue for any reason besides the one-time pay out, it should be considered income.
• Obtain 6 months bank statements if the lump sum has been deposited and consider it an asset.
ZERO INCOME
Any adult that claims to have zero/no income, even if another household member does have income,
must complete an Affidavit of Non-Employment. The household member must indicate their current
situation, how they are planning on covering living costs, and their plan for income within the
compliance period. This form must be completed when an applicant indicates they are living on savings.
If there is a concern that the plan is not reasonable, Owners/PM Staff may not approve a file until the
applicant can provide an adequate and reasonable scenario on how they will cover living arrangements.
If an applicant indicates they are currently not working, but plan on obtaining a job, current wage
statistics for the area must be imputed and counted towards household income. Current occupation
projections for the prior year may be found at https://esd.wa.gov/labormarketinfo/occupations.
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Owners/PM Staff will obtain a print off to be used for verification and calculation purposes. The median
income projection will be the figure used in income calculations.
If an applicant completes an Affidavit of Non-Employment stating that they have no intent on obtaining
employment within the next 12-month period, and later it is found that the applicant did obtain a job
within 90 days, Owners/PM Staff may determine that the applicant manipulated their paperwork in
order to qualify for the program. In this case Owners/PM Staff may take action to remove the restriction
status of the unit or follow other procedures used for dealing with fraudulent files.
Section 2. Assets
Assets are items of value that may be turned into cash. While OH does not count the value of the asset
when determining a prospective renter’s eligibility for a Designated Unit, any gains from assets will be
counted towards the overall household income. OH also does not set limits on asset values.
Types of income include:
• Interest: Money paid regularly at a particular rate for the use of money lent, or for delaying the
repayment of a debt.
• Capital Gain: A profit from the sale of property or an investment.
• Dividend: A dividend is a distribution of profits by a corporation to its shareholders. When a
corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to
shareholders.
• Equity of real estate: The difference between the fair market value of the property and the
amount of money you owe on the mortgage.
• Disbursements: The payment of money from a fund.
When recording assets on the TIC, the Building will record the cash value (total current value less
penalties and costs to liquidate) in Part IV. If the applicant cannot/does not provide documentation as to
the liquidation penalties, the total value shall be used.
When calculating the income from an asset, there are two ways to do that and OH requires the greater
of the two to be included as income.
Current vs. imputed:
• Current income earned from assets reflects the actual realized gain from an asset. This is most
easily calculated on bank or credit union accounts such as checking and savings or money
market accounts that explicitly state the rate of return on the monthly statement.
• Imputed amounts are calculated based on the HUD passbook rate. The current rate is .06%, but
this may change. Owners/PM Staff must look at both the current and actual gains as well as the
imputed gains.
• The Owner/PM Staff should use the higher of the current or imputed income to calculate
income from assets.
Below is a list of common types of assets and the types of verification required for each asset. This is not
an exhaustive list.
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Checking Accounts
Checking accounts are assets held with a financial institute that can receive deposits and withdrawals.
Generally, has a low or no interest earnings.
• Verification: Six (6) consecutive statements prior to move-in. Owners/PM Staff should review
for any deposits and obtain further verification for any deposit over $300.
• To calculate income, average the ending balance for the six statements and impute in the TIC
Part IV.
• If the checking account bears interest, annualize actual interest earned.
Savings Accounts
Savings accounts are assets held with a financial institute that can receive deposits and account owners
can withdrawal from account.
• Verification: Six (6) consecutive statements prior to move-in. Owners/PM Staff should review
for any deposits and obtain further verification for any deposit over $300.
• To calculate income, first average the ending balance for the six statements. Then annualize
actual interest earned as noted on the statements.
Stocks/Bonds/Treasury Bills/Certificates of Deposit/Money Market Accounts
The primary income from these types of assets is interest and dividends. Income can also be gained
from the sale of either stocks or bonds for profit.
• Verification: Quarterly statements that show the value of the asset. When possible, get a
completed Annuity, Stock and 401(k) Verification from their stockbroker as to the new amount a
family or household would receive if they liquidated the asset, less any penalties/fees for early
withdrawal.
• First calculate the value of the asset. This can be done by using the value of the account on the
statement. If applicant provides a statement allowing for the quantification of any penalties or
fees to liquidate, deduct this amount and enter the net amount in the TIC.
• Next, calculate the income from the asset by annualizing any dividends, disbursements or other
payments noted in the statement.
EXAMPLE
A household provides a quarterly statement valued at $50,000 and the statement shows a dividend
in the amount of $250. No other statement related to liquidation expenses is provided.
Enter $50,000 as the cash value in Part IV of the TIC.
Income from asset = $250 x 4 quarters = $1000.
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Online Financial Accounts
Including but not limited to: Peer lending, real estate investing, robo investing, crypto currency (Venmo,
Pay Pal, Fundrise, Lending Club, Robinhood, Acorn, Stash Cash, ApplePay, Etc.)
• Verification: Each of these accounts provide a monthly or quarterly statement. These are found
then the account holder logs in on a computer. Owners/PM Staff should review for any deposits
and obtain further verification as needed.
• To calculate income, annualize anything identified as income.
Retirement Accounts
Generally speaking, retirement accounts are not accessible until you are 59 ½. Most of these accounts
however, you may withdraw early with a 10% penalty. Early withdraw may also require a hardship claim.
If an account is accessible, with or without a fee, even if it requires a hardship claim, it must be counted
as an accessible asset.
• Types of accounts:
o 401K: For for-profit company employees. Money can be borrowed against, taken out, or
reinvested.
o 403B: For public employees and tax-exempt organizations. Money can be taken out for
certain reasons, and usually with a penalty. If accessible, even through a hardship claim,
it must be counted towards the total assets.
o IRA: An account that allows a person to direct their own retirement funds.
o KEOGH: A retirement plan for self-employed individuals.
o Pension: A retirement plan that provides a monthly income after retirement.
• Verification: Obtain the most recent consecutive statements covering a six (6) month period.
Review to ensure that no disbursements have been withdrawn. Keep the most recent in the file.
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Statements should reflect gains from the previous statement period to the next. If the applicant
does not provide documentation of penalties, withdrawal fees, or restrictions, count the full
value. To calculate income, apply the same protocol as you would a Stock/Bond/etc. above.
Trusts: When the Applicant is the Grantor.
A trust is a legal arrangement regulated by state law in which one party holds property for the benefit of
another. A trust can be cash or other liquid assets, or real or personal property that could be turned into
cash. There are two types of trusts, revocable and irrevocable.
• Revocable Trusts: The grantor of a revocable trust can change this type of trust as often as they
wish and therefore has access to this asset at any time. When an applicant grants this type of
trust for another, it is considered an asset and should be included in Part IV of the TIC.
• Irrevocable Trusts: This trust agreement allows an individual to permanently transfer the asset
during their lifetime to someone else. Trust which are irrevocable by or under the control of any
member of the household are not considered assets and should not be included in Part IV of the
TIC.
To calculate income, apply the same protocol as you would a Stock/Bond/etc. above.
As long as the trust exist, the actual income distributed to the household from such a trust must be
included as income when determining eligibly. If not, income is distributed to the household then do not
count income from the trust.
• Verification: Obtain a copy of the trust document.
Life Insurance
There are multiple types of life insurance policies. In most cases, the applicant has to access to the
money in the policy, as it will pay out to their beneficiary after their death. Universal Life insurance,
however, builds a “cash value” that may be withdrawn. Policies must be reviewed to see if they are
Term or Whole Life, or Universal Life.
• Verification: For Whole life and Universal Life policies only: Utiliize the Insurance Verification
form to determine the asset value to impute income.
Real Estate Owned
The value of the real estate is included as an asset, minus any unpaid balance on loans and reasonable
costs incurred to sell the asset (broker fees, penalties, etc.)
• Verification: Household must complete the Real Estate Valuation Form and supply any
additional information as directed by the form.
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Personal Property / Collectibles Held as Investment
This is for actual goods that are obtained and retained as an investment, such as gems, jewelry, coin
collections, antique cars, etc. A households’ wedding ring would be considered personal jewelry and
other personal items are not included as assets.
• Verification: Insurance valuation of the personal property/collectible held as an investment OR
current market-rate for given item. Impute increase in value.
Annuity
A fixed sum of money paid to someone on a yearly basis.
As an investment, the regular annual payment shall be counted towards the annual income, as well as
the interest earned on the total amount.
• Verification: Obtain the annuity contract.
Cash on Hand / Funds Not Held in a Financial Institution
Monies not kept in a financial institution but is available to the applicant.
• Verification: Applicant completed Cash on Hand Affidavit for amounts $1,000 or more only.
Assets Disposed of for Less than Fair Market Value
Applicants who dispose of assets for less than fair value have, in essence, voluntarily reduced their
ability to pay for housing. This is looked at similarly as someone who changes their income in order to
qualify for the program. Any assets found to have been sold for less than fair market value Should be
included in the annual income projection. to determine the amount used he will determine the market
value of the asset and reduce by the actual sales price. The difference shall be listed on the TIC as
“other” income.
Transactions Found in Statements
All applicants are required to submit six (6) consecutive months of statements for each and all of their
asset accounts for verification and documentation purposes. While reviewing statements, any and all
deposits coming in must be noted and identified, as well as coincide with the information listed on the
Income Certification. If while reviewing these statements an applicant is found to have deposits that do
not match what is disclosed in the Income Certification, they must be counted as income unless:
Any given amount is less than $300.
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Or
The deposit is from the US Treasury in the form of a tax return.
Or
The applicant can match transactions to receipts for dinners/purchases made as a group and the
incoming transactions are from group purchase members.
Or
The applicant is self-employed. Review the profit and loss statement. Some deposits may be business
related and thus business-related expenses are applicable. If deposits project out to be higher than
receipts disclosed during the Self-Employment income verification process, re-review the information
disclosed with the applicant.
Withdrawal of Cash or Assets from an Investment
Any asset disbursement payments shall be totaled over a six (6) month period and projected forward
(doubled). The entire amount of asset disbursements shall be counted as income.
Joint Assets
If an applicant is named on an asset account, and they have access to the resources in the account, the
account in its entirety shall be counted.
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Appendix B. Abbreviations and Defined Terms
Common terms used throughout this manual are defined below. Please note that these definitions are
specific to usage in this manual specifically and do not necessarily align with the terms’ usage in other
contexts or documents.
Affirmative Marketing: A plan for marketing available affordable housing units in a project to ensure
compliance with the MFTE/IZ/MHA programs and federal, state, and local fair housing laws governing
the prohibition of discriminatory housing practices.
Affordability Classification: The maximum income and associated rent threshold assigned to any
household occupying given Designated Unit, expressed as a maximum percentage of the area median
income.
Affordable Housing: Any rental unit subject to upper limits on tenant incomes and rents. Also known as
income- and rent-restricted housing.
Annual Income Certification: Income and asset certification for the entire household that must be
completed annually and effective on the date of the household’s anniversary date.
Annual Report Certification: Information required to be submitted to OH annually, including
information regarding units, rents, incomes for affordable housing residents, and other as determined
by OH. Reports are due January 31 for the period of January 1 – December 31 of the previous calendar
year.
Area Median Income (AMI): The median income for the metropolitan statistical area in which an
affordable housing unit is located, as determined by the U.S Department of Housing and Urban
Development. This is published by HUD from time to time aligns with the Affordability Classifications for
specific Designated Units.
Certification Period: The 12 months, or 365-day period commencing on the day of the initial lease start
date. This is the period looked at for projecting income on an initial income certification.
Compliance Fee: Annual fees due to OH for units under certain Incentive Programs.
Compliance Period: The period of time that a building is required to follow all applicable criteria
outlined in the executed agreements and covenants pertaining to the Incentive Programs.
Designated Unit: A residential unit that subject to income- and rent-restrictions under one or more of
the Incentive Programs.
Eligible Household: A household that has completed an initial income certification and has been
determined to have an income no greater than the applicable income limit. The household shall remain
eligible until determined otherwise.
Gross Income: The gross amount (before taxes or deductions) or wages, salaries, overtime pay,
commissions, fees, tips, bonuses, and other compensation of all of the adults of the household.
Household: The combined total of one or more applicants/tenants who occupy residential unit.
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Incentive Programs: City of Seattle programs that provide a property tax exemption, opportunities to
build more intensively, or other distinct opportunity to real estate developers in conjunction with an
obligation for developers to support the production of affordable housing within the City.
Incentive Zoning (IZ): Land use programs under which developers of commercial or residential
properties could tap extra (or “bonus”) height and/or floor area when contributing to affordable housing
production either through payment to OH or an on-site or off-site performance option. As of 2020
Incentive Zoning for affordable rental housing production has been replaced with Mandatory Housing
Affordability.
Income Certification (IC): Application completed by the applicant for consideration of eligibility of an
income and rent restricted affordable housing unit. This form is completed by the applicant household
and reviewed with Property Management.
Initial Income Certification: Income and asset certification for the entire household that must be
completed before a lease for a Designated Unit can be signed.
Lease Rider: Disclosures and other information that differentiate a Designated Unit lease from the form
of lease for market-rate units. As established in this manual, Owners shall attach to each resident lease
and rental agreement for all Designated Units.
Mandatory Housing Affordability (MHA): Land use programs, codified at SMC 23.58B and SMC 23.58C,
that provided contributions to affordable housing production in locations zoned for additional height
and/or floor area through triggering land use actions. MHA offers developers both payment and
performance options.
MFTE: Multi-Family Tax Exemption, codified at SMC 5.73.
Noncompliance: A failure to observe or perform any covenant, condition, or term of any agreement
between the Owner and The Office, or failure to meet the requirements of SMC that governs the
program.
OH: The Seattle Office of Housing.
Owner: The legal owner of record for a Property participating in an Incentive program. The Owner holds
sole responsibility for upholding the agreements that establish the Owner’s and the City’s mutual rights
and responsibilities.
PM Staff: Property management staff. As used in this manual, can include leasing agents or any other
personnel employed or contracted by the Owner for the purposes of day-to-day administration of a
Property.
Property: The entire real estate asset, inclusive of building and land, that participates in a City Incentive
Program.
SDCI: The Seattle Department of Construction and Inspections.
SHA: Seattle Housing Authority.
SMC: Seattle Municipal Code.
SOCR: Seattle Office for Civil Rights.
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Subsidy: Ongoing or time limited financial support from a federally or locally funded agency in the form
of monthly rental payment (either rent in its entirety or a partial payment towards rent). Common forms
of subsidy are the Housing Choice Voucher (Section 8) or HEN (Housing & Essential Needs) among
others.
Tenant Income Certification (TIC): Form completed by a property’s property management staff and
signed by the household which details the household’s total income, determination of eligibility, and
gross rent.
TRAO: The City’s Tenant Relocation Assistance Ordinance.
The City: The City of Seattle.
WSHFC: Washington State Housing Finance Commission.
