3 Marketing Practices to Help Your Site Expand Its Applicant Pool

LIHTC site owners and managers know that to comply with the vacant unit rule, you must make “reasonable attempts” to rent vacant units to qualified low-income households. The tax credit program’s vacant unit rule allows you to claim credits for tax credit units even if they’re unoccupied. The IRS permits an owner to continue claiming credits for a vacant unit as long as management makes reasonable efforts to rent the vacant unit (or another unit of comparable or smaller size) to a qualified low-income household [IRC §42(g)(1); §42(c)(1)(B)]. Vacant units are tax credit units that have been previously occupied by qualified low-income households.

While the IRS rules don’t explicitly define “reasonable attempts,” your staff can use a variety of resources to show that you’re diligent about renting the vacant units. IRS Revenue Ruling 2004-82, Q&A #9, outlines what amounts to reasonable attempts. According to the ruling, the determination is made on a case-by-case basis, considering the facts and circumstances, and may differ from site to site depending on factors such as the size and location of the project, tenant turnover rates, and market conditions. Also, the different advertising methods that are accessible to owners and prospective tenants would affect what’s considered reasonable. Question 9 in the revenue ruling included the following examples:

• Banners and for-rent signs at the entrance to the project;
• Classified advertisements in local newspapers;
• Maintaining a waiting list and contacting prospective low-income tenants; and
• Using a local public housing authority list of Section 8 voucher holders to identify and contact potential tenants.

In addition to keeping records of your marketing efforts so that you can show your state housing agency that you made reasonable attempts, your site’s community outreach needs to comply with the Fair Housing Act (FHA). When you place ads to fill vacancies or waiting lists at your tax credit site, what those ads say and where those ads appear can greatly influence who responds. For this reason, fair housing advocacy groups pay close attention to ads for rental housing. If you take actions that narrow your applicant pool, you could find yourself the target of a lawsuit or HUD enforcement action.

HUD’s Office of Fair Housing and Equal Opportunity (FHEO) recently released new guidance to reinforce requirements that HUD-subsidized multifamily housing’s marketing materials be designed to be inclusive of persons of all races and national origins. The guidance is designed to assist owners in understanding and implementing more inclusive practices that are less likely to produce discriminatory results.

HUD’s FHEO guidance was written to help HUD-assisted owners comply with Title VI of the Civil Rights Act of 1964. Title VI states that no person, on the grounds of race, color, or national origin, shall be denied participation in, be denied the benefits of, or be otherwise subject to discrimination under any program or activity that receives federal financial assistance. Although Title VI doesn’t explicitly apply to LIHTC sites, you can still apply HUD’s marketing guidance to help you comply with the FHA. The Treasury Department has stated that the FHA applies to LIHTC sites; the FHA also prohibits discrimination on the basis of race, color, national origin along with religion, sex, family status, and disability.

Remember that if your state housing agency discovers a fair housing violation, it must report you to the IRS for noncompliance. And, according to an Aug. 9, 2000, Treasury Department Memorandum of Agreement (MOU) with HUD and the U.S. Department of Justice, a finding of a violation of the FHA could result in the loss of tax credits. To prevent this from happening, we’ll discuss three marketing practices you can use to ensure all racial groups in a marketing area have knowledge of an opportunity to rent units at your site.  

Strategy #1: Advertise Site, Vacancies Broadly

When racial, ethnic, or national origin groups are underrepresented at a site compared to their representation among qualified housing-seekers in the market area or community, HUD says owners must evaluate how their marketing processes contribute to this imbalance and consider less-discriminatory alternatives.

HUD says an owner should aim “to ensure that all racial groups in a marketing area have knowledge of an opportunity to rent units in a particular building.” A marketing practice that results in excluding members of a protected class and sticking to the marketing strategy with full knowledge of its predictable effect may violate fair housing laws. HUD’s guidance identifies the following risky marketing practices that limit your applicant pool:

• Reliance on no advertising or word-of-mouth advertising, without additional efforts;
• Reliance on “For Rent” signs posted at the property, without additional efforts;
• Reliance on referrals from one or a very limited number of local organizations.

In contrast, HUD’s guidance recommends using a variety of community contacts, media, and social media, covering a broad geographic area. These are more likely to equitably reach potential applicants. HUD suggests distributing detailed flyers and blank applications to local organizations across the market area with ties to a wide range of prospective applicants.

Since many organizations serve only a subset of eligible residents, in general, the more organizations that are contacted, the more likely your marketing efforts can reach a diverse pool of applicants across your market area. Also, partnerships with community contacts throughout the market area may be particularly effective for reaching potential applicants who have limited Internet access, limited English proficiency, or who may otherwise require assistance in applying.

In addition to working with a wide range of local organizations, HUD says placing advertisements with local radio stations, newspapers, and newsletters, as well as posting advertisements in public places, such as buses, trains, and billboards can be effective in reaching additional applicants.

Strategy #2: Maintain an Informative Website, Online Presence

HUD notes that maintaining a website with clear information about availability, eligibility, and application processes can be a low-cost way to inform potential applicants about housing opportunities at the site–especially those who have difficulty calling or visiting during business hours. The same applies for posting on social media, local listservs, and other sites relevant to those looking for low-income housing in the community.

In conveying pertinent information to the public, be sure to describe available units and amenities, and not residents. Any words, symbols, or pictures on your website shouldn’t suggest that your site has a preference—for or against—anyone based on characteristics protected under federal, state, or local law.

The website may describe the grounds, its units, and features—but not the kind of people who may want to live there. Avoid phrases like, “Perfect for singles,” which imply a preference against families with children. Maps and directions are helpful, but avoid references to religious institutions or racially significant landmarks.

Be wary of posting pictures of people, including residents, employees, and others since these may raise potential fair housing concerns. It’s unlawful to use “human models” in photographs, drawings, or other graphics to indicate exclusiveness because of race, color, religion, sex, handicap, familial status, or national origin. If you do post pictures online, choose pictures that reflect diversity so that anyone visiting the site would understand that your site is open to all without regard to race, color, national origin, religion, sex, disability, or familial status.

HUD advises that “models should be clearly definable as reasonably representing majority and minority groups in the metropolitan area, both sexes, and, when appropriate, families with children. Models, if used, should portray persons in an equal social setting and indicate to the general public that the housing is open to all without regard to race, color, religion, sex, handicap, familial status, or national origin, and is not for the exclusive use of one such group.”

Finally, just as you would do in traditional advertising and other marketing materials, use the Equal Housing Opportunity logo or statement in online ads and on your website to demonstrate your commitment to comply with fair housing law.

Strategy #3: Ensure Advertising Reaches LEP Individuals

Individuals who don’t speak English as their primary language and who have a limited ability to read, speak, write, or understand English can be limited English proficient, or “LEP.” National origin discrimination often involves immigrants or non-English-speaking individuals, but it can also involve native-born U. S. citizens based on their family ancestry, says HUD. The FHA prohibits owners from using limited English proficiency in a way that causes an unjustified discriminatory effect on people based on their national origin. For example, an owner can’t refuse to show or rent the housing just because the prospect cannot speak English.

In fair housing investigations, HUD also looks at language-based restrictions to make sure they’re not simply an excuse or pretext to cover up discrimination based on race or national origin. In some cases, LEP persons may speak English well enough to conduct essential housing-related matters or have a household member who can provide assistance as needed, so a blanket refusal to deal with LEP persons is probably not motivated by genuine communication concerns. If the housing provider or resident can access free or low-cost language assistance, HUD says that any cost-based justifications for refusing to deal with LEP persons would also be immediately suspect.

The Justice Department recently filed a Statement of Interest with a New York District Court for a lawsuit alleging that the owner violated the FHA by refusing to rent apartments to LEP applicants unless someone who speaks and reads English lives in the unit. The Justice Department’s statement explains how policies that exclude rental housing applicants because they don’t speak English may violate the FHA. The lawsuit further alleges that the owner refused the applicants’ offers to bring their own interpreters to translate lease documents and assist with communications [CNY Fair Housing v. Swiss Village LLC, Filed April 2022].

You can combat this type of discrimination by adopting more inclusive advertising practices. When conducting marketing and outreach, the presence of LEP persons among the eligible population in the community should be evaluated. If you have a significant number of LEP individuals in your community and they are least likely to know about or apply for housing at your site, you should consider marketing to them. You can target these groups without being too selective by running ads in the language of the group that you need to target. Have your ad translated into that demographic group’s language and run it in conjunction with multiple ads (and languages) in various media outlets. Be sure to document these ad campaigns.

If your site participates in the Housing Choice Voucher program or receives other HUD financial assistance such as HOME funds, your site has greater obligations to provide meaningful access to your LEP applicants and beneficiaries under Title VI. You’re required to provide leases translated into the native language of the applicant or tenant and must also provide some form of translation for effective communication. However, the translation services and translated leases aren’t required of owners who participate in Section 8 or strictly LIHTC programs.