Tenant Selection Plans: The Eight Requirements
What is a tenant selection plan (TSP)? Owners must develop and make public written tenant selection policies and procedures that include descriptions of the eligibility requirements and income limits for admission. It must include whether there is an elderly restriction or preference, or preference in the admission of tenants. A TSP is in place to ensure that the quality of management and tenant services are in compliance with the guidelines contained in the Department of Housing and Urban Development (HUD) Handbooks 4350.1 REV-1 and 4350.3 REV-1, as well as the Section 8 Housing Assistance Payments Contract and other HUD directives.
HUD does not approve a tenant selection plan unless owners adopt a local or resident preference. However, during the Management and Occupancy review, also known as MOR, a TSP will be reviewed by the HUD authorized representative to determine compliance with the TSP guidelines in the HUD Handbook 4350.3 REV-1. Non-compliance will result in a deficiency and lower rating.
A TSP must specify a number of policies and procedures of which eight are required. This article will provide a brief description of the 8 required topics.
Project Eligibility Requirements
The first required section is Project eligibility requirements which describes the 3 main criteria by which the owner must determine whether a family is eligible to reside in a specific property. These are Project Specific Requirements such as if the property is designated for elderly or disabled; Citizenship/immigration Status Requirements and Social Security Number requirements.
Income Limits
The second required section is Income Limits. A family’s eligibility for assistance is based on the income limit applicable to the type of housing assistance the family is to receive. Section 8 properties, depending upon the effective date of the initial Housing Assistance Payments (HAP) contract for the property, use either the low or very low-income limit. More information on Income Limits can be found in the HUD Handbook 4350.3 REV-1 Chapter 3 Eligibility for Assistance and Occupancy. One will also need to know their site-specific annual income limits, which can be found on www.huduser.gov.
Application Procedures
The third required section is procedures for taking applications and selecting from the waiting list. One will want to establish how their property takes applications including pre-applications, any preferences and verification of such, income targeting, Applicant Screening Criteria, and the procedures for rejecting ineligible applicants.
Occupancy Standards
The fourth required section is occupancy standards. The owner must establish occupancy standards as part of the property’s tenant selection plan and consistently apply those standards in assigning unit size to applicants. These are used to determine the appropriate unit size and procedures for placing families on the waiting list for more than one unit size. For units with accessible features, owners must first offer these units to families that include persons with disabilities requiring such features.
Unit Transfer Policies
The fifth required section is Unit Transfer Policies. These policies must include procedures for selecting between applicants on the waiting list and current tenants who need accommodation due to a change in family size or composition, medical reason certified by a doctor, or the need for an accessible unit. Owners should have a reasonable accommodation policy in place, as well.
Compliance Policies
The sixth section is policies to comply with Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination based on disability, The Fair Housing Act Amendments of 1988, which prohibit discrimination of the 7 protected classes, and Title VI of the Civil Rights Act of 1964, which probit discrimination based on race, color or national origin.
Waiting List Policy
The seventh section is the policy for opening and closing the waiting list. The waiting list may be closed for one or more unit sizes when the average wait is excessive, which HUD suggests is one year or more. When the waiting list is closed, new applicants must be advised that applications are suspended, and a notice must be published in a publication likely to be read by potential applicants. When re-opening the waiting list, the owner, again, must publish a notice that includes rules for applying, the order in which applications will be processed, as well as when, where, and how to apply. One must be sure to follow their Affirmative Fair Housing Marketing plan.
Eligibility of Students
The final required section is Eligibility of Students. Section 8 assistance shall not be provided to any individual who is a part-time or full-time student. There are exceptions to this rule which must be listed in one’s tenant selection.
For more information on Tenant Selection Plans as well as help with creating or updating your plan, contact M&L Compliance Management.
Creating and maintaining affordable housing communities is a complex task. Numerous state and federal requirements must be followed – both during development and for years thereafter. We clarify LIHTC, Federal HOME, HUD, and certification requirements you must follow to remain compliant. For more information on these services be sure to visit our Property Compliance page and don’t hesitate to contact us. The information presented in this post is intended solely for informational purposes and should not be construed as consulting advice from M&L Compliance or McKonly & Asbury, LLP.
About the Author
Jennifer is currently a Compliance Consultant and has been with MLCM since 2022. She has over 20 years of experience in affordable housing starting as a property manager in 2002 to now offering expertise and guidance in various industry to… Read more