Federal housing officials are moving full speed ahead this year with new rules that will require public housing tenants deemed “over income” to pay significantly higher rent.
They’re also moving ahead with plans to end eligibility for public housing for residents with more than $100,000 in total assets and to evict any resident found to own real property “suitable for occupancy.”
Even the rules on deductible expenses are changing. They will significantly increase the unreimbursed medical expenses a tenant must pay out before those qualify for a deduction.
The changes by the U.S. Department of Housing and Urban Development (HUD) are spelled out in proposed rules on how to calculate income and assets of housing authority residents. These rules, first released in February but still subject to HUD’s soon-to-arrive final guidance, will determine whether a tenant is eligible to be in public housing and, if so, how much rent they have to pay.
HUD restated their position after an advocacy group, the Council of Large Public Housing Authorities (CLPHA), early last week erroneously claimed that the department had “announced” that the housing department would be delaying compliance with the new rules on income calculation, deductions and asset determination until 2025.
“HUD did not announce anything. There was no announcement,” Doug Rice, special policy advisor in HUD’s Office of Public and Indian Housing, told THE CITY.
Rice said HUD has “no intention of changing anything about the notice on the over income provision or in any way delaying compliance on that,” and that the agency will “very soon” issue “further guidance on how to interpret and implement the rule itself” about calculating income and assets.
Still Over Income
CLPHA and three other advocate groups tied to a total of 3,200 housing authorities nationwide, including the New York City Housing Authority (NYCHA), wrote to HUD in May requesting that it move the date by which they must be in compliance with these new rules from January 2024 to January 2025.
The letter said that the new rules “represent arguably the biggest change in decades to how PHAs calculate residents’ income,” and impose “new limitations” on how housing authorities determine a resident’s assets.
The new rules “will have a significant impact on [public housing authority] operations and residents,” the letter notes.
In early June, NYCHA mailed notices to 290 “over income” households that their rents would be going up based on these new rules.
Then last week, THE CITY reported on CLPHA’s claim that HUD would delay rent hikes, including to the 290 NYCHA tenants. HUD officials, after first declining to answer THE CITY’s questions, said after the story was published that the initiative to collect higher rent would go forward as originally scheduled.
HUD said NYCHA and all housing authorities can use the current rules to determine this first round of “over income” households, but going forward, these yet-to-be-announced final guidance will likely change.
Barbara Brancaccio, spokesperson for NYCHA, said the authority “will continue to follow HUD requirements related to” the new protocols “which include changes regarding over-income households.”
Another key change will be a new cap on assets, including ending assistance for any tenant determined to have total assets of more than $100,000. Assets can include savings and checking accounts and property used for commercial purposes.
Any tenant who owns real property that is “suitable for occupancy” would also no longer qualify to live in public housing, the new rules state.
The threshold for deducting unreimbursed medical expenses will increase from 3% of a tenant’s income to 10%.
The new rules do make exceptions for some assets, exempting retirement and education savings accounts and increasing the standard deduction for families with a head or spouse who is elderly or has a disability.
Under current rules, only lower-income applicants can obtain public housing apartments, and cannot be charged more than 30% of their income. That 30% cap holds even if the income of an eligible tenant rises to a much higher level.
During the Obama administration in 2016, Congress passed a new law that allowed housing authorities to declare that tenants who make 120% or more of an area’s median income were no longer eligible for public housing and could be charged “fair market rent.” That’s less than “market rent” but still significantly more than public housing rent.
Under this change, HUD allows housing authorities to simply terminate a resident’s tenancy, but NYCHA chose to let “over income” tenants stay in their apartments as long as they sign new leases that require higher monthly rent payments.
For “over income” NYCHA residents — bringing in more than $112,000 for a one-bedroom household or 160,000 for a four-bedroom household — tenants now paying flat rent of $1,700 would see their rent rise to $2,100; tenants paying flat rent of $2,600 would pay $3,300.
The 290 NYCHA households that got notices early last month were told they must sign a new lease with the higher rent within 60 days. They can contest the income calculation but if their income is ultimately determined to be “over income” and they refuse to sign the new lease, they face eviction. NYCHA will also no longer pay for their utilities.
The new rent for “over income” households takes effect in early August, while the asset and deduction changes aren’t set to take effect until January. They come as NYCHA estimates it needs $40 billion to upgrade deteriorating conditions in its entire portfolio and is struggling to close a budget gap caused by growing rent arrears that began during the pandemic and continued after a rent moratorium ended in January 2022.
NYCHA is now short $480 million in back rent while its collection rate has fallen to just 63%.