Guidance on Over-Income Implementation Process Released

On May 3rd, HUD released Notice PIH-2019-11 (HA) titled “Final Implementation of Public Housing Over-Income Limit Under the Housing Opportunity Through Modernization Act of 2016 (HOTMA).” The notice provides supplemental information on the implementation process for public housing income limits, which were codified through regulation last summer.

On July 26, 2018, HUD posted a notice in the Federal Register implementing Public Housing income limits as required by 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 new notice provides additional background on the methodology used to calculate the over-income limit. HUD uses 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’s regulation uses 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 also provides guidance on how to implement the new statutory income limit for continued occupancy in public housing including the new documentation, notification, and tracking requirements. If a PHA discovers through an annual reexamination or an interim reexamination that a family’s income exceeds the applicable over-income limit, the PHA must document that the family exceeds the threshold and make a note in the tenant file to compare it with the family’s income a year later. PHAs must provide written notification to the family if the family’s income continues to exceed the over-income limit one year after the initial over-income finding by the PHA. This notification must inform the family that their income has exceeded the over-income limit for one year, and if the family’s income continues to exceed the over-income limit for the next 12 consecutive months, the family will be subject to either a higher rent or termination based on the PHA’s policies. If the initial over income determination was made during an interim reexamination, the PHA must conduct a second interim income reexamination on that date one year later. However, if a PHA discovers through an annual or interim reexamination that a previously over-income family has income that is now below the over-income limit, the family is no longer subject to these provisions. A previously over-income family would be entitled to a new two-year grace period if the family’s income once again exceeds the over-income limit.

The notice does not address how a PHA should set rents for over-income families that the PHA has allowed to remain in public housing. HUD plans to issues a proposed rule in the coming months addressing rent setting for over income residents.

The Notice can be found here:

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