HUD Changes Income Verification Rules for PHAs

HUD has issued Notice PIH 2013-3, establishing temporary guidelines for public housing agencies (PHAs) in fulfilling certain public housing and Housing Choice Voucher program requirements during this period of decreased resources available to PHAs. It offers PHAs four options that they may adopt in order to ease the burdens associated with administration of the public housing and voucher programs. Keep in mind that these changes only apply to PHAs and are only for public housing and vouchers:

1. Annual Income Determinations – PHAs now have the option of projecting income for the upcoming year or using income from the prior 12-months to determine the annual income of a household (note: this may impact the ability of tax credit properties to use PHA verification of income for a voucher resident);
2. Assets Verification – When households have assets of $5,000 or less, PHAs have the option of verifying all assets or allowing households to self-certify (this matches the requirement for LIHTC properties);
3. Fixed Incomes – For elderly and disabled households with fixed incomes (pension, Disability, Social Security and SSI), instead of verifying income and calculating rent every year, PHAs may use published COLAs to determine income; and
4. Rent Payment Standard – when a disabled resident needs a reasonable accommodation, a PHA may provide a rent payment standard of up to 120-percent of the fair market rent (as opposed to the 110% current permitted).

These changes are set to expire March 31, 2014, but HUD is pursuing permanent changes to provide more flexibility to PHAs.

• This guidance is important for PHAs, but also for LIHTC properties that use PHA verification of income for voucher residents. Prior to accepting a PHA verification of income for a voucher resident, owners and managers of LIHTC properties should determine the method of income determination to be used by the PHA. Since HUD project-based Section 8 requirements are that income be projected for the 12-month period following the effective date of the certification, PHA verification of income for the prior 12-months will not meet the requirements of the LIHTC program and may not be acceptable for tax credit purposes.

Please feel free to contact me with any questions.

AJ