HOMEfires - Vol. 10 No.2, February 2009

Q: Does the recently issued final rule on "Refinement of Income and Rent Determination Requirements in Public and Assisted Housing Programs" affect the way that Participating Jurisdictions (PJ) determine income-eligibility of HOME participants?

 
A. Yes. On January 27, 2009, HUD's Office of Public and Indian Housing (PIH) issued a final rule on "Refinement of Income and Rent Determination Requirements in Public and Assisted Housing Programs." Effective March 30, 2009, this rule amends 24 CFR Part 5 to change the way that public housing agencies (PHAs) and multi-family housing owners and management agents (O/As) verify and determine the eligibility of applicants and tenants for HUD's public and assisted housing programs. The HOME regulations establish the Part 5 definition of "annual income" (often referred to as the Section 8 definition) as one of the three permissible definitions of "annual income" for the HOME Program. Consequently, the January 27, 2009, final rule also makes conforming changes to the HOME regulations at 24 CFR 92.203(d)(1) "Income Determinations" to ensure consistency among HUD programs. With the exception of the changes reflected in §92.203(d)(1), the Part 5 changes do not apply to the HOME Program.

The HOME regulations at §92.203(b)(1) permit PJs to use the Part 5 definition of annual income found at §5.609, except that the value of a homeowner's principal residence may be excluded from the calculation of "net family assets". Prior to the January 27, 2009, revisions, the HOME regulations required HOME PJs to determine an applicant's anticipated annual income (regardless of the definition of annual income being used) by projecting the prevailing rate of income forward for 12 months. The January 27, 2009, final rule adds that in certain situations, PJs may alternatively calculate a family's projected annual income using the family's actual past income. The practical effect of this change is minimal, although PJs will now be better equipped to deal with situations in which projecting current income forward may not produce an accurate result.

The revised regulation at §92.203(d)(1) requires PJs to calculate a family's income based on the actual income being received by the family at the time the PJ determines the family is income-eligible, and project the family’s income forward for a twelve month period. For example, if the PJ determines that the family's monthly income is $500, the PJ must multiply this amount by 12 to compute an annual income of $6,000. This is similar to the previous method. However, if the PJ is unable to determine the family's annual income using current information because the family reports little to no income or because income fluctuates, the revised regulation authorizes the PJ to use the family's actual past income. Under this method, the PJ must average the actual income received or earned by the family within the last twelve months, then use this average monthly income to calculate the family’s projected annual income. For example, if the PJ determines that the family's total actual income for the past twelve months was $5,800 (ranging from $400 to $500 per month), the PJ must divide this amount by 12 to compute the average monthly income of $483. Then the PJ must project this average monthly income forward for a twelve month period, resulting in a determination of an annual income of $5,800.

The PJ may also request the family to provide documentation of the family's current income, and if the family can provide acceptable documentation dated either within the 60-day period preceding the determination date or the 60-day period following the PJ's request date, the PJ may use this documentation to determine annual income. For example, if the family can document that its current income is $400 a month, the PJ may project this documented monthly income forward for a twelve month period, resulting in a determination of an annual income of $4,800.

These provisions apply to all entities (e.g., subrecipients, state-recipients, rental project owners) that perform income determinations on a PJ's behalf. Consequently, PJs must ensure that these entities are made aware of the new procedures. Note that §92.203(d)(1) continues to require that annual income include income from all family members, and that income or asset enhancement from the HOME-assisted project being funded is not considered in calculating the family's annual income.