Working with HOME Line, HJC discovered that a prominent Twin Cities developer is charging tenants too much rent in an affordable tax credit building.
Under the Low Income Housing Tax Credit program (LIHTC), developers build affordable apartment buildings with the aid of federal tax credits. In exchange for receiving tax credits, developers agree to keep rents affordable to households at 60% of the Area Median Income. Although labeled “affordable,” rents at 60% AMI are often close or equal to market-rate rents. A Minnesota law helps somewhat by requiring that 20% of the units have rents within the Fair Market Rent level, which permits the use of Section 8 vouchers and generally produces rents below 60% AMI.
However, this law only helps if developers follow it.
Residents of the Legends of Silver Lake in St Anthony Village were concerned about rent increases and contacted HOME Line through their hotline. HOME Line and HJC investigated and discovered that the developer Dominium was failing to comply with the FMR requirement for 20% of the units. When questioned about their practices, Dominium sought to justify the rents by resorting to an exception in the law permitting higher rents. Still, our research has shown that they are misinterpreting the law and overcharging low-income tenants at the Legends. So far, we have calculated overcharges as much as $3000 for individual tenants, and, as long as the overcharges continue, the amount of back rent owned to overcharged tenants will only go up. HJC and HOME Line may have to take legal action to get this corrected, and the tenants reimbursed for overcharges.