The Department of Housing & Urban Development (HUD) published a notice in the July 26, 2018 Federal Register implementing a statutory requirement from the Housing Opportunity Through Modernization Act of 2016 (HOTMA) that places a limit on the income of public housing residents. The Notice goes into effect on September 24, 2018.
Background
HOTMA amended the Housing Act of 1937 to place 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 two consecutive years, a public housing agency (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. The income limit established by HOTMA is referred to as the “over-income limit.” A PHA must notify a family of the potential changes to monthly rent after one year of the family’s income exceeding the over-income limit. The over-income limit does not apply to PHAs operating fewer than 250 public housing units that are renting to families with income exceeding the over-income limit, if the PHAs are renting to those families because there are no income-eligible families on the PHA waiting list. Each PHA must submit a report annually to HUD regarding the number of families residing in public housing with incomes exceeding the over-income limit and the number of families on the waiting lists for admission to public housing projects. These reports must be publicly available.
This notice finalizes how the over-income limit is determined and informs PHAs how to begin implementing the statutory income limit for public housing. However, the notice does not address how a PHA is to determine the monthly subsidy to use in setting rents for over-income families that the PHA has allowed to remain in public housing. HUD will follow this notice with a proposed rule on this issue. This notice does not make effective the requirement to submit the annual report on the number of over-income families. HUD intends to make this reporting requirement effective through another forthcoming notice.
What This Notice Does
This notice essentially implements the requirement to begin tracking over-income public housing residents through the recertification process. As of September 24, 2018, HUD will be following the provisions of HOTMA, using the method of determining the over-income limit as described in the November 29, 2016 notice. PHAs must update their Admissions and Continued Occupancy Policies (ACOP) to implement these changes. Such policies must include the imposition of an over-income limit in the program, all instances of when the two-year timeframe begins, and notification requirements. PHAs must complete all relevant policy and PHA plan changes no later than March 24, 2019, which is six months after the effective date of this notice.
Once a PHA has completed updates to its ACOP and Plan, when the PHA becomes aware that a family’s income exceeds the applicable income limit, the PHA must document that the family exceeds the threshold to compare with the family’s income one year later.
If, one year after the initial determination by the PHA that a family’s income exceeds the over-income limit, the family’s income continues to exceed the over-income limit, the PHA must provide written notification to the family that their income has exceeded the over-income limit for one-year, and that 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 PHAs policies. If a family requests an interim reexamination, which then demonstrates that a family’s income has dropped below the over-income limit, the family is no longer considered over-income. If a PHA becomes aware, through a subsequent annual reexamination or an interim reexamination that the family’s income has increased to an amount that exceeds the over-income limit, the family will begin a new two-year clock.
HUD will provide additional information on where to locate applicable income limits (which are not yet available), guidelines for PHAs to set alternative rents for over-income families, and any other guidance regarding this provision in a forthcoming notice. The task for PHAs at this point is to begin the process of updating relevant policies and plans, and to do so by March 24, 2019.