How to Set and Apply Admissions Preferences
As you work with families and individuals who apply to live at your site, you may give preference to certain categories of applicants. HUD says that it's okay to establish preferences, as long as you follow certain rules. HUD views the process of assigning preferences to applicants who meet certain criteria as a means of providing housing opportunities based on household circumstances. For example, you may give an admissions preference to “working households” or to households that reside within the municipality where your site is located.
Giving preferences is optional; you do not have to establish any admissions preferences (aside from HUD's requirement that you give priority to households that are “extremely low income”—that is, those making 30 percent or less of your area's median income). But if you decide to set preferences, it's important to do so in a way that will comply with HUD rules and avoid fair housing or other discrimination claims.
Here are two key requirements to consider when establishing and applying admissions preferences:
Applicants qualifying for preferences are selected from your waiting list. Preferences affect only the order of applicants on the waiting list. Preferences do not make anyone eligible who was not otherwise eligible.
You must inform all applicants about available preferences that you use and give all applicants an opportunity to show that they qualify for them.
“It's important that all preferences are well documented on the waiting list so that it's easy to identify which applicants were chosen and when,” explains compliance and training expert Sonja D. Horn, president of DASH Compliance. “I often see findings related to residency preferences because managers are not consistently documenting their waiting list.”
You also must follow certain other preferences that have been established by HUD and Congress. The following preferences, which vary based on the type of subsidy your site receives, have been established in an effort to provide housing to those most in need [Handbook 4350.3, 4-6]:
Displacement. Owners of Section 221(d)(4), 221(d)(3), and 221(d)(3) BMIR sites must give preference to applicants who have been displaced by government action or a presidentially declared disaster. HUD also says that owners of Section 236 sites give preference for these displacements. Section 236 sites that also offer rental assistance through the RAP program must rank applicants according to certain income parameters.
State and local preferences. You also may apply preferences required by state or local laws, but only if they are consistent with HUD rules and applicable civil rights requirements for fair housing. For example, some states require owners to provide a preference for housing to military veterans. If you wish to use a preference such as this, you must submit a written request to the HUD Field Office, describing the specific state or local law and requesting HUD's concurrence with your use of the preference.
Setting Your Own Preferences
In addition to the preferences already outlined, HUD says that you may use other preferences for your site. Handbook 4350.3 states that “Owners are permitted to establish other preferences for assisted properties as long as they are subordinate to any program-specific preferences…and comply with applicable fair housing and civil rights statutes.” Some preferences that you may choose to use require prior approval from HUD, while some do not.
Here are examples of the types of preferences you may consider:
Residency preference. This type of preference provides applicants who live in a specific geographic area at the time of application a priority over those who do not live in that area. If this is a preference you wish to establish, keep the following in mind:
You must never adopt a residency requirement, meaning that you won't lease to an applicant who doesn't live in the specified geographic area.
You may not use a residency preference for the purpose of delaying or denying admission based on the race, color, ethnic origin, gender, religion, or disability of any member of an applicant household.
You must have HUD's approval to use a residency preference before you can use it.
You must consider applicants who work in the specific geographic area, applicants who have been hired to work in the geographic area, and applicants who are expected to live in the geographic area as a result of planned employment (that is, have a bona fide offer for employment).
You may consider graduates or active participants in education and training programs located in the specific geographic area, if the education or training is designed to prepare individuals for the job market.
You must get HUD approval through a modification to the Affirmative Fair Housing Marketing Plan, if your site is a Section 8 property.
You may not base a residency preference on the length of time an applicant has lived or worked in the specific geographic area.
You may not hold units open because of your residency preference if there are no eligible residents on your waiting list. In this case, you must admit the next household on your waiting list.
Working families. You may adopt a preference in selecting families from your waiting list in which the head of the household or spouse is employed. With this preference, you must make sure you do not discriminate against persons who are unable to work.
Disability. You may adopt a preference to select families that include a person with a disability. But you may not create a preference for those with a specific type of disability unless such a practice is allowed in the controlling documents for your site.
Victims of domestic violence. You may establish a preference for admitting families that include victims of domestic violence.
Specific groups of single persons. You may adopt preferences for single persons who are elderly, displaced, homeless, or those who have disabilities, selecting these over other single persons.
“A problem I see with preferences is that managers don't realize that all applicants eligible for a preference should be admitted in chronological order based on their time of application,” Horn says. “So if you have a preference for working families, all applicants who are working families are selected before other applicants who aren't eligible for the preference, but there are no preferences within preferences. I often see managers trying to ‘rank’ applicants within preferences to move them in out of order.”
Identify Preferences in Tenant Selection Plan
If you decide to assign levels of importance to preferences you adopt, you must identify the system of ranking or rating in your tenant selection plan. And you must be consistent in your use of the ranking or rating.
For example, you may choose to give the highest-ranking—your top-priority—preference to working families. You'll have to apply this preference in a way that's subordinate to income-targeting requirements and to applicable statutory and regulatory preferences.
You also could choose to adopt a policy that gives top priority to an applicant who qualifies for the most preference categories, also known as combining preferences. Applying preferences by weighing them in these ways is acceptable to HUD, as long as you are consistent in their use. And as Horn notes, fair housing rules still apply when preferences are adopted.
Keep Applicants Informed
One of the key requirements when you adopt admissions preferences is that you must inform all applicants about the available preferences that you use and give all applicants an opportunity to show that they qualify for them. This is particularly important if you establish new preferences after individuals and families have applied.
You should inform applicants in writing. Many owners and managers use a letter such as our Model Letter: Advise Applicants of Admissions Preferences, to advise and/or remind applicants about HUD's low-income targeting requirements as well. If applicants remain on the waiting list for some time, their income circumstances could change.
Your letter, like our Model Letter, should:
Explain in simple terms that the applicants may be able to improve their position on your waiting list if their household income is 30 percent or less than the median income in your area. You can use one letter for all applicants—instead of trying to modify it for each applicant—by listing the relevant income levels for each household size. (Remember that HUD's income limits change for each fiscal year, so be sure you use current figures for your area.)
Inform them of any preferences that you have established for your site. You may want to state this in a couple of different ways so applicants are clear on how the information might positively affect their admission to your site.
Give details about any requirements households must meet to get priority.
Invite them to contact you if they believe they may be entitled to an admissions priority.
Sonja D. Horn: President, DASH Compliance; (205) 222-3520; email@example.com.
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