HUD PIH Issues Guidance on Over-Income Limits for Public Housing Families
PHAs must fully implement over-income policies by July 14.
In the last issue, we discussed HUD’s final rule for implementing the remaining Housing Opportunity Through Modernization Act (HOTMA) provisions and covered the two sections of HOTMA that apply to HUD multifamily housing properties (see HUD Releases Final HOTMA Rule on Income Reviews and Asset Limits). For the remaining section, HUD’s Office of Public and Indian Housing (PIH) recently issued Notice PIH-2023-03, which provides supplemental guidance on the implementation of Section 103.
This section constitutes the “over-income” provision of Section 103 of HOTMA. The section applies only to public housing agencies (PHAs) with 250 or more public housing units. It modifies the continued occupancy standards for public housing households whose income exceeds the statutory limit. Section 103 became effective on March 16, 2023, and PHAs must fully implement over-income policies no later than July 14, 2023.
According to the statute, after a household’s income has exceeded the over-income (OI) limit for 24 consecutive months, a PHA must either terminate the household’s public housing tenancy within six months or allow by PHA policy the OI household to continue to live in a public housing unit by charging the household an alternative rent. The alternative rent must equal the greater of the Fair Market Rent (FMR) or the amount of monthly subsidy provided for the unit as determined by the amount of Operating and Capital Funds apportioned to a unit. Here are some additional details regarding implementation of the over-income rules.
This figure is set by multiplying the very low-income level for the applicable area by a factor of 2.4, a limit equal to approximately 120 percent of the area median income (AMI). The very low-income level varies by jurisdiction and by household size, so each PHA must calculate the OI limit for households of each size occupying their units.
OI procedures are triggered by annual or interim reexaminations. If the household’s annual income is greater than the OI limit, then it exceeds the OI limit for the program and the OI notification process begins. This is a change from prior guidance provided in Notice PIH 2019-11, which instructed PHAs to compare the OI limit to the family’s adjusted income. A PHA must update OI limits in its Admissions and Continued Occupancy Policies (ACOP) no later than 60 days after HUD publishes new income limits each year.
Falling Below OI Limit
If the PHA determines (in an interim or regular reexamination) that a family’s income has fallen below the OI limit at any time during the 24-month grace period, the family will remain public housing program participants and return to regular income reexamination periods. If the family becomes OI again, the PHA begins a new 24-month grace period.
Once a family is determined to be over-income, a PHA must notify the household. Notice PIH 2023-03 requires three written notices, while Notice PIH-2019-11 required only two. Each notice must be given within 30 days of the income examination that determines the family is, or remains, OI—at the initial determination of OI status, following the reexamination at the conclusion of the first 12 months of the grace period, and at the conclusion of the 24-month grace period.
All notices must be provided in writing and state what actions will be taken as required under the PHA’s OI policy in the ACOP. If applicable, the notice must include the alternative rent amount. All notices must provide information on the family’s right to a grievance hearing.
PHAs must have a continued occupancy policy detailed in its ACOP to either require OI families to execute a new non-public housing over-income (NPHOI) lease within 60 days of notification and charge the family the alternative non-public housing rent, or terminate the tenancy of the family no more than six months after the notification.
PHAs may choose to adopt a waitlist preference for NPHOI families who again become income-eligible for readmission to the public housing program. These families would then reapply. OI families who have vacated public housing are not eligible for this preference.
The PHA must submit a report annually that specifies the number of OI families residing in a PHA’s public housing as of the end of the calendar year. This report will be pulled by HUD via the form HUD-50058. The PHA must also submit a report that specifies the number of families on the waiting lists for admission to public housing. This information will be submitted through the Operating Fund Web Portal beginning Jan. 1, 2024.