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What to know about HOTMA's new income limits

On July 26, 2018, HUD published Housing Opportunity Through Modernization Act of 2016: Final Implementation of Public Housing Income Limits in the Federal Register, which placed an income limitation on public housing tenancy. The rule requires that after a family’s income has exceeded 120 percent of area median income (AMI), or a different limitation established by the Secretary based on local housing costs, for two consecutive years, the PHA must either:

  • Terminate the family’s tenancy within 6 months of the second income determination; or
  • Charge the family a rent equal to the greater of the:
    • Applicable fair market rent
    • Amount of monthly subsidy for the unit, including amounts from the operating and capital fund

For annual or interim recertifications performed on or after the applicable date of the notice (September 24, 2018), the PHA must determine whether the family’s income exceeds the applicable HUD-published over-income limit. If so, the PHA must document the family’s file. If, 12 consecutive months from the annual or interim recertification, the family’s income continues to exceed the over-income limit, the PHA must notify the family in writing 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 the PHA’s over-income policies. The PHA may not exempt any public housing families from the over-income limitation.

If the family’s income continues to exceed the over-income limit for another 12 consecutive months, the family will either experience an increase in rent or be subject to termination after 6 months, depending on PHA policy. HUD will issue a notice detailing how these new rent policies will be implemented.

Note, the time period is two consecutive years. If the family’s income is reduced below the over-income limit at any time, these policies no longer apply. If the family subsequently experiences an increase that again causes their income to be at or above the over-income limit, the 2-year period starts over.

This notice 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 PHA is renting to those families because no income-eligible families are on the PHA’s waiting list.

Important things to note from the notice include:

  • HUD will publish the over-income limits. The PHA does not have to calculate them.
  • PHAs must complete changes to the PHA Plan (if applicable) and the ACOP no later than six months from the effective date of the notice.
  • The PHA will need to develop a tracking system for over-income families to monitor the one and two-year time periods.
  • Increases in the over-income limit may cause a previously over-income family to be under the over-income limit.
  • Over-income policies apply to both annual and interim recertifications.

HUD will issue additional guidance on the following:

  • The calculation of a unit’s monthly subsidy
  • Whether utility allowances apply to the calculation of rent under these options
  • The requirement to report the number of over-income families and the number of families on the waiting list
  • How PHAs are supposed to track over-income families
  • How to notify familiesGet help updating your ACOP