What is a LURA?

A Land Use Restriction Agreement also known as LURA is a legal document typically used in multifamily housing developments, especially those that receive government subsidies or tax credits, to ensure that the property is used in a way that meets specific affordable housing requirements.                                                                                                                                                   

Key Aspects of a LURA:

1. Purpose:
   • Affordable Housing: Ensure that the property provides affordable housing units for low-income tenants.
   • Compliance: Ensure compliance with the terms of funding programs, such as the Low-Income Housing Tax Credit (LIHTC) program.                                                                                                                                         
2. Duration:
   • Long-Term Commitment: LURAs typically require property owners to maintain affordability for a specified period, often 15-30 years or more.                                                                                                           
3. Restrictions:
   • Income Limits: Limits on the income levels of tenants who can occupy the affordable units.
   • Rent Limits: Caps on the amount of rent that can be charged to ensure affordability.
   • Occupancy Requirements: Requirements for the percentage of units that must be occupied by low-income tenants.                         
4. Monitoring and Compliance:
   • Annual Reporting: Property owners may be required to submit annual reports to demonstrate compliance with the LURA terms.
   • Inspections: Periodic inspections by government agencies or other entities to ensure the property meets the agreed-upon standards.                                       
5. Penalties for Non-Compliance:
   • Recapture of Tax Credits: In the case of LIHTC properties, failure to comply can result in the recapture of tax credits.
   • Legal Action: Non-compliance can lead to legal action and financial penalties.                                                                         
6. Transferability:
   • Binding on Successors: The terms of a LURA are typically binding on future owners of the property, ensuring long-term adherence to affordability requirements.                                                                                                                                                                                                            

When is a LURA Required?

1. Government Subsidies: When a multifamily housing project receives government subsidies, such as LIHTCs, HOME Investment Partnerships Program funds, or other federal, state, or local funding.                                            
2. Affordable Housing Programs: Participation in affordable housing programs that require long-term affordability commitments.              
3. Development Agreements: As part of development agreements with local governments, particularly in exchange for zoning variances or other concessions.                                                                                                                                                                                                                      

Example Clauses in a LURA:

1. Affordability Period: “The Owner agrees to maintain the affordability of the units for a period of 30 years from the date of this agreement.”
2. Income and Rent Restrictions: “At least 20% of the units shall be rented to households earning no more than 50% of the area median income, and the rent for these units shall not exceed 30% of the household’s income.”
3. Reporting Requirements: “The Owner shall submit an annual compliance report to the housing authority, including tenant income certifications and rent rolls.”
4. Enforcement: “Failure to comply with the terms of this agreement may result in the recapture of tax credits and legal action to enforce compliance.”                                                                                                                                                                                                                                                 

Benefits of a LURA:

1. Promotes Affordable Housing: Ensures long-term availability of affordable housing for low-income families.
2. Access to Funding: Enables property owners to access government funding and tax credits.
3. Community Stability: Helps maintain diverse and stable communities by providing housing options for different income levels.                                                      

Conclusion:

A LURA is an important tool in promoting and maintaining affordable housing within multifamily developments. By legally binding property owners to affordability standards, it ensures that the benefits of government subsidies and tax credits are realized by low-income tenants over the long term. Property owners and developers need to understand and comply with LURA terms to maintain eligibility for funding and avoid penalties.

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