The Pennsylvania Housing Finance Agency has issued Interim Guidance on the implementation of Income Averaging in Tax Credit properties under development. The Agency will be revising the upcoming Allocation Plan to address Income Averaging in Tax Credit applications submitted in the future. For the most part, current projects are not able to apply for income averaging.
However, PHFA may, on a case by case basis, consider income averaging in compelling circumstances for pending tax exempt financed applications; especially if displacement can be avoided in preservation projects which currently house over-income tenants. In order to be considered for this exception, applications shall: (1) not contain any unrestricted or market-rate residential units in the development (and PHFA may further restrict multiple building applications); (2) have units of similar size and configuration throughout the building regardless of income restrictions; (3) have no more than 10 percent of the units in excess of 60 percent AMI (while still maintaining an overall less than 60 percent development AMI); (4) not elect more than four rental income targets; and (5) provide a market study supporting income and rent targeting. The Agency will not permit income averaging on preservation developments already subject to a tax credit restrictive covenant agreement. The Agency may impose additional processing and compliance fees for developments permitted to use income averaging.
