HUD Explains How It Would Implement New Public Housing Income Limits

HUD published a notice in the Federal Register seeking comment on how HUD proposes to implement the new public housing income limit provision of the Housing Opportunity Through Modernization Act of 2016 (HOTMA).

Section 103 of HOTMA places an income limitation on a public housing tenancy for families. The law requires that after a family’s income has exceeded 120 percent of the area median income (AMI) for the most recent two consecutive annual reviews, a PHA must terminate the family’s tenancy within six months of the second income determination or charge the family a monthly rent equal to the greater of (1) the applicable Fair Market Rent (FMR); or (2) the amount of monthly subsidy for the unit including amounts from the operating and capital fund. A PHA must notify a family of the potential changes to monthly rent after one year of the family’s income exceeding 120 percent of the AMI.

Pursuant to 24 CFR 960.503, this section doesn’t apply to small PHAs that are renting to families with income over 120 percent of AMI. Each PHA must submit a report annually to HUD about the number of families residing in public housing with incomes exceeding the applicable income limitation and the number of families on the waiting lists for admission to public housing projects. Such reports must be publically available.

Section 103 of HOTMA sets a maximum amount of annual adjusted income for a family to occupy a public housing unit at 120 percent of the AMI. However, HUD has the ability to adjust that 120 percent if the secretary determines that it’s necessary to do so because of prevailing levels of construction costs, or unusually high or low family incomes, vacancy rates, or rental costs.

The notice explains how HUD makes adjustments for high housing costs and low housing costs, and indicates that it will apply those adjustment formulas to the 120 percent AMI limit where necessary. HUD calculates low-, very low-, and extremely low-income limits for the public housing program. These income limits are used for assessing program eligibility. Very low-income (VLI) limits 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 a High Housing Cost Adjustment; Low Housing Cost Adjustment; State Non-Metro Median Family Income Adjustment; and Ceilings and Floors for Changes.

For the purpose of determining the income limit, including any adjustments, HUD will use the VLI limit as the basis of the 120 percent income limit (by multiplying the VLI limit by a factor of 2.4). For those areas without an adjustment, the result is an income limit of 120 percent of AMI. For areas where HUD has made an adjustment to the VLI limit, the result of the multiplier will be higher or lower than 120 percent of AMI, depending on the adjustments made. For example, for the Los Angeles metropolitan statistical areas (MSAs), HUD’s income limit methodology results in a high housing cost adjustment, therefore, the income limit for families residing in this area is 167 percent of AMI, due to the higher housing costs in this MSA.

HUD will accept comments until Dec. 29. There are two methods for submitting public comments. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410–0500. Or interested persons may submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov.