HUD Proposed Legislation on Assisted Rents and Other Issues

On April 25, 2018, HUD sent a legislative proposal to Congress titled, “Making Affordable Housing Work Act of 2018.” The proposed legislation contains seven sections that, if passed into law by Congress and signed by the President, would significantly impact the rent paid by low-income residents in HUD assisted housing. Highlights of the proposed bill follow.

Rental Payments Amendments

1. OCCUPANCY REQUIREMENTS & FAMILY RENTS:
   1. Occupancy Requirements
      1. Income Limits – at the time of initial occupancy, families must be low-income. This is defined as no more than 80% of the area median gross income.
      2. Overhousing – No one person, living alone, may be provided an assisted housing unit of two or more bedrooms, unless that person is –
         1. An elderly person;
         2. A person with disabilities;
         3. A displaced person; or
         4. The remaining member of a tenant family.

• Absence of Children – the temporary absence of a child from the home due to placement in foster care shall not be considered in determining family composition and family size (this does not change current regulation).

1. Rent Structures
   1. Rents for Families – a family shall pay as monthly rent the higher of
      1. 35% of the family’s monthly income (no deductions would be permitted – i.e., dependent, child care, disability, elderly or medical); or
      2. 35% of the amount earned by an individual working 15 hours a week for four weeks at the federal minimum wage, rounded to the nearest $10. HUD may adjust the number of hours of work per week used to determine the family rent through regulation, but the number of hours may not be less than 15. (Based on the current $7.25 minimum wage, this comes out to a minimum of $154 per month in rent).
   2. Rents for Exempted Families – Elderly families, disabled families, and such other families defined by HUD through regulation will pay month rent that is the higher of –
      1. 30% of the family’s monthly income (again, this is the gross income); or
      2. minimum rent, which shall be at least $50 and may be adjusted through regulation.

• Hardship Exemption –
  1. Hardship exemptions include the following:
     1996. The family has lost eligibility for, or is awaiting an eligibility determination for, a Federal, State, or local assistance program, including a family that includes a member who is an alien lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to public benefits but for title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
     1997. The family would be evicted as a result of the imposition of the family rent structure.
     1998. The income of the family has decreased because of changed circumstances, including the loss of employment.
     1999. A death in the family.
     2000. Other situations as may be determined by the Public Housing Agency (PHA), owner, or HUD.
  2. Waiting Period – if a family requests a hardship exemption and the PHA or owner reasonably determines the hardship to be of a temporary nature, an exemption shall not be granted for the 90-day period following the request for the exemption. A family may not be evicted for nonpayment of rent during the 90-day period. If the family thereafter demonstrates that the financial hardship is of a long-term basis, the PHA or owner shall retroactively exempt the family from the family rent for the 90-day period.

1. Alternative Family Rent Structures –
   1. HUD established rents – HUD may establish alternative family rent structures that a PHA or owner may elect to adopt. These may include, but are not limited to, tiered rents, stepped rents, or timed escrow.
   2. PHA and Owner Established Rents – PHAs and owners may request HUD approval for an alternative rent, as long as the alternative
      1. Serves substantially the same number of families as the HUD prescribed family rent without additional Federal appropriated funds;
      2. Is appropriate for the housing market;
      3. Provides a reasonable hardship exemption for families; and
      4. Meets any other standards established by HUD.
   3. Alternative Income Recertifications – HUD may establish requirements for income recertifications different from those in the proposes bill.
2. Minimum Family Share –
   1. Minimum Work Requirements – a PHA or owner may establish minimum work requirements for individuals or families, excluding persons at least 65 years of age, persons with disabilities, elderly and disabled families, and such other individuals or families as defined through HUD regulation. A PHA or owner that imposes work requirements will be exempt from imposing the community service and self-sufficiency requirements otherwise required by HUD. HUD will publish regulations establishing –
      1. Criteria regarding the population that may be subject to work requirements;
      2. The maximum number of hours per week that a PHA or owner may require;
      3. The definition of work, including forms of employment or employment related activities that would satisfy any work requirement of the PHA or owner; and
      4. Other HUD imposed criteria.
   2. Reviews of Family Income –
      1. Review of family income shall be made –
         1. In the case of all families, upon the initial provision of housing assistance for the family; and
         2. Every three years thereafter. (Note that this changes the current requirement that only fixed income reviews are required on an every three-year basis. Based on the language in the proposed bill, all recertifications would be done an a three-year basis).
      2. Interim Reexaminations –
         1. Interims will only be required if a family’s income decreases by 20% or more.
         2. Interims for elderly families, a disabled family, or other families as defined by HUD through regulation would only be required if the family’s income decreases by 10% or more.
         3. There would no longer be interims for increases in family income.
      3. Calculation of Income –
         1. Use of current year income – income for initial occupancy or income recertifications would use the income of the family as estimated by the PHA or owner for the upcoming year, which may be based on the prior year’s income.
         2. Safe Harbor – PHAs or owners may determine family income based on timely income determinations through other means tested Federal public assistance programs (e.g., TANF determinations, Medicaid assistance, and SNAP). HUD will develop electronic procedures to enable PHAs and owners to have access to such determinations.
      4. Important Definitions in the proposed bill –
         1. Elderly Family – head, co-head or spouse must be elderly (62+) –
            1. For purposes of determining whether the 35% or 30% rent requirement must be met, requesting interim reexaminations, and setting work requirements, all adults living in the unit, other than a live-in aide, shall be a person with disabilities or who is at least 65 (not 62) years of age.
         2. Disabled Family – head, co-head or spouse must be disabled –
            1. For purposes of determining whether the 35% or 30% rent requirement must be met, requesting interim reexaminations, and setting work requirements, all adults living in the unit, other than a live-in aide shall be a person with disabilities or who is at least 65 (not 62) years of age.
         3. Elderly Person – a person who is at least 62 years of age.
      5. INCOME –
         1. Excluded Amounts – new guidance –
            1. Any return on net family assets, as long as the value of the net family assets is under $25,000, after an annual inflation adjustment to be published by HUD; and
            2. All expenses relating to VA aid and attendance.
         2. HOLD HARMLESS FOR ELDERLY & DISABLED FAMILIES – in terms of implementation of the new rent requirements, for disabled families and families consisting of persons 62 and older receiving assistance at the time this bill is enacted, any rent increases shall be phased in over two triennial recertifications.
         3. TENANT BASED ASSISTANCE (housing choice vouchers) –
            1. if the rent for a family receiving tenant based assistance (including any utility allowance) does not exceed the applicable payment standard, the monthly assistance payment for the family shall be equal to the amount by which the rent for the unit exceeds the minimum family share for the unit. This will essentially require that PHAs pay the full payment standard – even if the LIHTC maximum rent is less than the payment standard.
            2. if the rent for a family receiving tenant based assistance (including any utility allowance) exceeds the applicable payment standard, the monthly assistance payment for the family shall be equal to the amount by which the applicable payment standard exceeds the minimum family share. In other words, PHAs will not be able to pay more than the payment standard.
         4. SELF-CERTIFICATION OF ASSETS – the law signed by President Obama in 2015 permitted self-certification of assets under $50,000; this proposed bill would change that threshold to $25,000.

This proposed legislation is just that – PROPOSED! Owner and managers of HUD-assisted housing should make no changes to procedures currently being followed. This legislation will face an uphill battle in Congress – especially with regard to the rent changes, which will have a significant impact on low-income residents. At this time, the proposed bill has not been scheduled for hearings and rapid action is unlikely.

I will stay on top of any progress this bill (and any other important housing legislation) makes through Congress and will provide updates as those changes occur.