I am writing to you as I am concerned that some recent direction coming from the BPDA is inconsistent with the BPDA’s own standards, is inconsistent with general fair housing practices, and is inhibiting our shared goals of efficiently filling affordable units with the households who qualify for and need the housing offered through this important program.
We had a very productive phone call with Peter and Mary this past Friday during which some of these issues were touched upon, and it sounds like some changes are in the process of being made. Nevertheless, I believe there is more that needs to be done to improve Boston’s IDP program, and I hope this email can help serve as a framework from which further changes can be made.
My three main concerns involve (1) the BPDA’s inconsistent approach as to what does/does not constitute a “guarantor” (and therein, what documentation does or does not need to be submitted with the file for this determination), (2) the lack of clear written rules on how audits are to be conducted or what the appropriate remedies are when the BPDA determines a tenant is ineligible, and (3) the repercussions when the BPDA determines a household is out of compliance (as the Affordable Rental Housing Agreement conflicts with the BPDA Lease Addendum which sometimes conflicts with the BPDA’s decisions on how to remediate non-compliant tenancy).
The above three issues are creating confusion and administrative problems for us, properties, and applicants, and we believe the lack of clear directives will eventually lead to discrimination lawsuits against the BPDA, our clients and possibly SEB Housing, if we do not take immediate steps to protect ourselves. We must avoid putting ourselves in the way of a potential disparate impact lawsuit and so the actions we are planning on taking to try to continue to facilitate and expedite this process while protecting ourselves are outlined below. We also are requesting better coordination on the audit process, particularly now that Hub25 and Bell Olmsted Park are going to be going through an audit (that is covered in point 2 below, and was also covered in our phone call with Peter and Mary).
1. Inconsistent Application of “Guarantor” Definition
There seems to be a recent change in BPDA policy in respect to guarantors aimed at ensuring that households who have financial support from outside the household are not occupying units intended for households with no such support. While I applaud the effort (and at the end of this section I make some suggestions on how I think the intended households should be screened out), I think the application of the intention needs serious reconsideration. As currently applied, the BPDA’s concern about outside support is resulting in numerous households being required to submit documentation that is not clearly specified in the BPDA Affidavit of Eligibility, and many households are being told by the BPDA that they are ineligible based on unwritten standards and policies that the BPDA is implementing at their own discretion. We understand that the BPDA reserves the right to make the final determination on a household’s eligibility, but we have a variety of concerns that this policy has created.
A. There are insufficient written guidelines or explanations as to what does and does not constitute a guarantor. The BPDA Affidavit of Eligibility states “I understand that co-signers and guarantors are not permitted unless they are co-tenants who will reside in the unit. Guarantors include persons who are not members of the applicant household but who make regular and/or substantial monetary contributions to members of the household.” Neither “regular” nor “substantial” is further defined, nor are there any examples provided to shed light on what would constitute “regular” or “substantial.” When we have asked for further clarification, we have been told that the BPDA has the discretion to determine what constitutes “regular” or “substantial,” and we should contact Doug or Peter when questions come up. As you can probably appreciate, having to ask for clarification on a case by case basis is both an inefficient and imperfect solution, and so we have previously requested that some standards be put into place that we can more easily apply. But currently, the standards remain mostly ill-defined and discretionary, and thus hard for us to apply.
The BPDA is quite capable of creating workable standards for income and eligibility that third parties such as SEB Housing can implement. For example, for self-employment income, the BPDA policy is that a household’s projected self-employment income is the average of their net self-employment income earned over the two previous tax years up through the time of application. That is not a HUD standard, but a reasonable standard created by the BPDA that can be applied evenly. We think that the BPDA can similarly establish a clear standard to define a guarantor, and we make some suggestions later in this section.
B. There have been a lot of minority households denied for having “guarantors”. Our experience indicates that recent immigrants or people with family oversees often receive some basic support from household members outside of the unit. Even if it is support that is a minor percentage of the rent, or if it is support that, if counted as income (which is how most other programs handle it) would still be well under the income limit, a lot of these households are being deemed ineligible for having a “guarantor” (even though no co-signer or guarantor is on the lease). We are concerned that this new policy is going to have the unintended consequence of a higher percentage of minorities than non-minorities being denied IDP housing, which could give rise to claims of disparate impact.
C. As there are virtually no standards for what is a guarantor, we (and other agencies and other properties) cannot proactively require households to submit additional documentation that is not explicitly covered in the BPDA Affidavit without subjecting ourselves to substantial risk of a discrimination lawsuit. We already get fair housing complaints filed against us for denying households when they fail to (or refuse to) provide their federal or state tax transcripts, which are items explicitly required in the BPDA Affidavit, as they claim we are placing barriers in their way to getting housing. We can handle such complaints because we can point to the Affidavit and show that we are just following a written BPDA requirement. But if we proactively request 3 months of bank statements (or 6 months, or 12 months, like the BPDA has asked) when we see a bank deposit that we believe needs further explanation, and then that applicant fails to submit documentation and is thus unable to lease a BPDA unit for failure to meet such a requirement, we would be very vulnerable to a discrimination lawsuit as we have no written guideline to point to as justification for why we asked for the 3, 6, or 12 months of bank statements.
D. The BPDA applies the definition of guarantor inconsistently. This makes it difficult/impossible for us to know exactly what to ask for. We have multiple examples of this, but a recent and obvious one is SEB Housing requested that a household applying for a BPDA unit provide explanatory documentation for deposits in a Bank of America checking account that included: $250 on 7/25, $200 on 7/25, $200 on 7/26, $150 on 8/1, $100 on 8/1, $250 on 8/2, $100 on 8/6, $10 on 8/9, $10 on 8/9, $150 on 8/12, $150 on 8/12, $40 on 8/12, $200 on 8/15.
When the property emailed a BPDA employee asking them why SEB Housing was requiring documentation explaining these deposits, that employee told the property that we did NOT need to ask for explanatory documentation, writing that the BPDA “normally only requires explanations for deposits of $300, or more, however when there are frequent small deposits that might be indicative of self-employment or a guarantor, we would request an explanation for those as well. Also, based on the frequency of deposits, we would require back up documentation, preferably copies of checks. Lastly, notarized letters are not required. As a point of information, cash app reports do not have to be submitted, except for the rare occasions when they would explain multiple deposits that look like self-employment, etc..”
If the above deposits are not considered “frequent” or are not flagged as “regular,” then what is? Our confusion is compounded by the fact that we are often told applicants need to provide documentation for deposits under $300, even when those deposits are not frequent or regular. Additionally, in today’s economy and in the income tiers this program serves, many households have deposits from cash apps like PayPal or Venmo, and any deposit from a cash app into an account could (and maybe should) be considered evidence of self-employment. But without clearer standards from the BPDA as to what amount or frequency of deposits (including cash apps) made into a household’s bank account require further examination, it makes it exceedingly difficult for us to properly complete files with the documentation the BPDA deems necessary.
It seems to us that even the same BPDA staff members sometimes have different standards in terms of the requisite documentation they require, which standards also differ at times from the standards of other staff members. When there is no consistent standard being applied by the BPDA, we cannot do our job properly screening applicants for program eligibility (and I’ve already mentioned the concerns raised by the uneven application of unwritten guidelines). Moreover, such uneven application could lead to lawsuits from applicants, but those would almost certainly involve the BPDA and so I’m not sure that lawsuits from applicants should be “welcomed,” as a BPDA employee recently wrote in an email.
E. The BPDA seems to use a household’s reported income to “flag” a file when that income is low, but those standards are also unclear.
When a household’s income disclosed in the BPDA Affidavit of Eligibility is low compared to the monthly rent (such that the household will be paying a majority of their gross monthly income towards rent), it seems to trigger additional questions or documentation requests from the BPDA. We agree that it does make sense that if a household’s reported income is less than the monthly rent, then something is clearly not being reported. But again, there isn’t a set standard for this, and we think that there should be a standard outlining what rent to income ratios require further explanation. We also think that a household’s income can form the foundation from which the BPDA can base their standards for what constitutes a “guarantor.” Some suggestions are listed below in the Section entitled “Proposed Changes the BPDA Could Make To Address the Concerns Just Mentioned.” But we’ll first address what we see as the BPDA’s current practice for addressing these situations.
For current tenants with incomes that are so low that their ability to pay rent on their own is suspicious, the BPDA will sometimes ask the property to explain why they are comfortable renewing the tenant’s lease. This strikes us as an unnecessary request and does not move the process forward in trying to uncover if a household has undisclosed funds. All it does is cause delays in the process. This is because every property is willing to renew a tenant’s lease if they are paying their rent on time. This is the case for both market and affordable units (as no property manager asks tenants to submit income/asset information prior to lease renewal, that documentation is only asked when a household originally applied for the unit, after which time the tenant’s history in their building is what determines whether or not the tenant can renew their lease). So if during an audit, the BPDA asks the property to confirm why they were comfortable renewing the lease of a tenant whose lease they already renewed, there is very rarely anything in those responses that provides new information into how the household has enough income to pay the rent (as actual guarantors or co-signers are already prohibited). All that is accomplished by asking a property to explain why they were comfortable renewing a lease is that it hints at a guideline or a criterion that doesn’t (yet) exist.
We suggest the BPDA do away with asking a question which does not produce tangible results and even when answered, does nothing to impact or change the documentation that the tenant will still need to produce to satisfy the BPDA’s questions on whether or not they have a guarantor. Instead, the BPDA should go a short step further and create clear thresholds/rules that will trigger the requirement that additional documentation be provided in a fair and consistent way. (more on this below in the Section “Proposed Changes . . .”)
F. The BPDA counts some forms of unreported income and not others, and not always consistently. This is unique to the BPDA Program as other affordable housing programs count all forms of income as income.
It has been our experience that if an applicant receives $200/week for an “under the table” job, the BPDA does not count that as income. But if that same applicant receives $200/week from a family member, then the household might be considered to have a “guarantor” and would be ineligible for a unit. Remarkably, if a household receives $70,000+ a year in child support from an informal agreement (i.e. not court ordered), the BPDA has indicated that none of that is counted as income if it isn’t reported on their taxes (and that household also wouldn’t be disqualified as having a “guarantor”). It is difficult for us to reconcile how $200/week from a family member could run afoul of the guarantor prohibition, whereas $70,000/year in informal child support does not, or how $10,000 earned from a job where the applicant is paid in cash doesn’t count towards their household income, or how a household who is self-employed but did not file taxes in the previous year is disqualified or ineligible for only having unreported income. Not only is it unclear what the differentiating factors are in counting income as income (i.e. does it depend upon how the money is used by the recipient, whether it is reported to the IRS, or some other criteria?) but it seemingly requires the BPDA to make more judgment calls than necessary.
In our estimation, a far more workable, and consistent standard, (and one applied by virtually all other affordable housing programs) is to simply treat ALL sources of reportable income as income to be applied towards the maximum income limit for the unit. Should that be the standard, then the household who receives $200/week for a little extra help with expenses could still qualify for the program assuming those payments do not put them over the income limit (which seems like the correct result to us), whereas, the household who receives $70,000+ a year in informal child support which, if counted, would put them well over the income limit, would not be able to continue to occupy an IDP unit as might currently be allowed by the BPDA by dint of the fact that that household has characterized the payments in a certain manner, or neglected to report them to the IRS altogether (which seems like the wrong result to us). Disqualifying households for having “guarantors,” but allowing and virtually ignoring other sources of informal payments further complicates a process that already has inconsistency in its application of standards.
Proposed Changes the BPDA Could Make To Address the Concerns Just Mentioned:
Some suggestions for new guidelines for BPDA Certifications and Recertifications include the following standards (which we think are critical to put in place to ensure all households are screened fairly and consistently):
-Any tenant whose total monthly household income (which does NOT include any financial support coming from outside the household) is less than the monthly rent is not eligible for recertification and must vacate the unit at the end of their lease term. This is something that is already applied in practice, but there is no guideline specifying this. If there were a guideline, properties (and agencies like us) could simply deem the household ineligible at recertification.
-Any tenant whose monthly household income (not including financial support coming from outside the household) exceeds the rent but is not more than twice the rent is required to submit 3 months (or 6 months, we don’t care, just make it consistent) of bank statements with the BPDA Affidavit of Eligibility. If these households receive average monthly financial support (from outside the household) that is greater than or equal to 50% of the rent, then they are ineligible for Certification/Recertification.
-Any tenant whose monthly household income (not including financial support coming from outside the household) is more than twice the rent just needs to submit one month’s bank statements (which is the current requirement in the Affidavit of Eligibility). As these households can seemingly pay for the affordable unit on the strength of their own income, unless in the statements that they provide, there is financial support coming from outside the household that is more than the amount of rent (or some other standard), they are eligible for the unit. However, the support that they receive from outside the house will be counted toward the income limit, and they must still be under the allowable income limit for the BPDA unit.
-Count ALL income as income for purposes of calculating a household’s income against the maximum allowable income for the unit. Unreported income to the IRS is still income. Cash income is still income. “Under the table” income that is reported on the BPDA Affidavit of Eligibility or discovered during the review process is still income. Unemployment income is still income. All other affordable housing programs count these sources of income as income. If the BPDA insists on enforcing their own definition of “guarantor” for informal payments or sources of income, yet allows/ignores informal payments for undisclosed/untaxed jobs, this creates a major loophole and inconsistency in the program.
If clearer guidelines and standards are not created, then:
-Require all tenants who need to renew their lease to go through a BPDA Recertification process similar to the BPDA Certification they needed to complete prior to move-in (meaning, the BPDA would have to approve the Re-certification prior to a lease being renewed). The time and work these audits take, and the resulting remediation, is much more work for all involved than if the BPDA reviews were done prior to lease renewal.
Changes To SEB Housing’s Processing of BPDA Affidavit of Eligibility:
Given our concern that the prohibition against “guarantors,” as currently defined by the BPDA, may have a disparate impact on minorities, and given that we feel that there is a lack of clarity on what constitutes a “guarantor,” SEB Housing feels we have no choice but to take the following actions:
Going forward, for initial certifications, we are going to have to start sending files to the BPDA that are “conditionally approved by SEB Housing pending BPDA review of income and/or BPDA review of deposits.” We can prepare the applicants to have additional documentation ready, but we do not feel comfortable making applicants submit documentation that is not explicitly covered in the BPDA Affidavit and which may not be necessary, thus subjecting ourselves and our clients to liability for unfairly putting up barriers to applying (for example, by proactively asking for 12 months of bank statements).
Going forward, for recertifications, our plan is to give households who we believe are eligible conditional approval to renew leases, but, we will tell them that there may be some deposits in their account that the BPDA may flag in an audit, and they may be found to be ineligible and may have to vacate after 30 days (if the language in the BDPA Lease Addendum is to be overridden, more on this below).
As an alternative approach, we can ask the BPDA for their opinion on what deposit documentation may be needed in order to recertify a current tenant who has bank account deposits that are not clearly tied to a job, but please understand that this will need to be done for a majority of files, as just about every applicant has bank accounts with deposits that in the harsh light being applied might seem suspicious. It seems unnecessarily burdensome to both us and the BPDA to require that the BPDA address each and every one of these cases before we feel comfortable asking the applicant for additional documentation beyond what is required in the four corners of the BPDA Affidavit. Certainly, having a clear set of guidelines would save us all a lot of time. If we do proceed down this path, we would request that the BPDA provide a written response to these proactive inquiries we will be making, so properties can enforce that to the applicant (and protect themselves legally).
But the BPDA should recognize that this approach will still be imperfect, as there will likely still be some cases where the BPDA may approve a recertification based on what we described in an email, only to later determine at audit that the household is ineligible. Indeed, there have been multiple times where a current tenant in an IDP unit was BPDA approved as program eligible for move-in and their income and circumstances did not change over the course of their tenancy, and so the documentation we gathered for recertification reflected the same documentation that was in their file when they were initially approved, and yet their recertification file was deemed insufficient by the BPDA . So, with that in mind, even if we get an informal decision from the BPDA approving a recertifying household, we think we will still need to prepare both the applicant and the property that the household may still be found ineligible if the property is audited.