HUD Implements Over Income Limits for Public Housing Residents

On July 26, HUD posted a notice in the Federal Register implementing Public Housing income limits as required by the Housing Opportunity Through Modernization Act of 2016 (HOTMA). HOTMA places the threshold for over-income families as those with incomes over 120 percent of area median income (AMI) for the most recent two consecutive years. If a family meets this threshold, public housing authorities (PHAs) have the option of either charging the higher of the fair market rent for the unit or the monthly subsidy (operating and capital fund), or terminating the tenancy within 6 months. Language in HOTMA also provides the Secretary the discretion to establish different income limitations based on local construction costs or unusually high or low incomes, vacancy rates, or rents.

HUD’s final implement will use its calculation of very low-income (VLI) to determine income limits. VLIs are preliminarily calculated as 50 percent of the estimated area median family income. VLI limits include several adjustments to align the income limits with program requirements including: high housing cost adjustments, low housing cost adjustments, state and non-metro median family income adjustments, and ceiling and floors for changes. HUD is proposing to use the VLI as the basis for the 120 percent income limit by multiplying the VLI limit by a factor of 2.4. Areas without a VLI adjustment would result in an income limit of 120 percent of AMI. Areas with an adjustment would be higher or lower than 120 percent AMI, depending upon the adjustments made.

The notice finalizes how the over-income limit is determined and informs PHAs how to begin implementing the income limit for public housing. HUD is still required to issue a regulation to address how a PHA determines the monthly subsidy to use in setting rents for over-income families that the PHA has allowed to remain in public housing, and will do so in the future. HUD will also issue guidelines for how PHAs are to set their policies for addressing over-income families after the 2-year grace period has ended.

PHAs must update their Admissions and Continued Occupancy Policies (ACOP) to implement the over income limits. Such policies must include the imposition of an over-income limit in the program, all instances of when the two-year time frame begins, and notification requirements. If the implementation of this provision requires a significant amendment to a PHA’s annual plan, a PHA should immediately take steps to complete the significant amendment process. PHAs must complete all relevant policy and PHA plan changes by late March, 2019 – six months after the effect date of this notice (September 24, 2018).

Previously, HUD posted a notice soliciting public comment on a proposal to determine the over-income limit by using the very low-income (VLI) level for the applicable area as the baseline and multiplying it by 2.4 on November 29, 2016. The final implementation posted by HUD today is very similar to the proposal posted back in November 2016. NAHRO submitted comments largely in support the proposal in January, 2017.

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