Introduction
The U.S. Department of Housing and Urban Development (HUD) has released Notice H 2013-10, which expands upon the Final Rule for implementing the Housing Opportunity Through Modernization Act (HOTMA). The publication of this guidance in September 2023 seeks to clarify aspects concerning the calculation of income for the purposes of determining eligibility and continued occupancy in HUD-assisted housing.
Clarifications for Income Calculations
HUD’s Notice introduces detailed procedures for income calculation during both new admissions and interim reexaminations. Public Housing Authorities (PHAs) and Multi-Family Housing (MFH) owners must calculate household income based on anticipated earnings over the next 12 months for these assessments, a method that aligns with pre-HOTMA practices.
Revisions for Annual Recertifications
The Final Rule incorporates significant changes to the process of annual income recertification. Property owners now have the flexibility to employ a “safe harbor” verification method, leveraging income determinations from other federal means-tested programs as a valid form of verification for gross annual income. When streamlined or safe harbor approaches are not utilized, the actual income from the prior 12 months will serve as the basis for recalculating tenant rental assistance. Any changes in income, regardless of their nature, must be taken into account.
Three-Step Determination Process
The procedure for establishing the previous year’s income for recertification purposes involves:
- Determining the annual income: This involves reviewing the EIV Income Report, prior HUD forms, and family certifications to establish a baseline figure.
- Considering interim reexaminations: In instances where interim reexaminations have occurred, the resultant annual income figure from these should be used unless further changes in income necessitate a reevaluation.
- Adjusting for reported changes: If families report income changes not captured during the last reexamination, current income data should be employed.
Documentation and Verification Hierarchy
HUD outlines a verification hierarchy to establish accuracy in income reporting, with the Electronic Income Verification (EIV) system at its pinnacle. The hierarchy descends from written third-party verifications to self-certification, with a deep dive into acceptable verifications planned for a future article.
Incorporation of Social Security COLA
The HUD Notice requires that the Social Security Administration’s annual cost-of-living adjustments (COLAs) be included in income calculations immediately after their announcement, affecting all reexaminations scheduled for January 1st or later of the following year.
Handling De Minimis Errors
The Notice also addresses minor, or de minimis, errors in income calculation, where discrepancies do not exceed $30 per month. Such minor inaccuracies will not lead to compliance findings against owners during reviews. However, owners are responsible for correcting even these small errors retroactively and adjusting tenant rent accordingly.
Conclusion
With this additional guidance, HUD has streamlined the process for calculating household income, thus simplifying compliance for PHAs and property owners. The Notice places a strong emphasis on accuracy and fairness in income determination, ensuring that families receive the correct level of assistance while minimizing errors and their subsequent impact.