Public Comment Period Opens Today on Potential Changes to Income Limits

From: HUD USER News
 
A Federal Register Notice published on Monday,
September 14, 2009, is seeking comments on a proposal
to end HUD's policy of maintaining Section 8 income
limits at the previously published level in cases
where they would otherwise decrease. HUD adopted this
"hold harmless" policy to ensure that Multifamily Tax
Subsidy Projects (MTSPs) would not be subject to
income-limit decreases. MTSPs are affordable rental
housing projects subsidized with the Low-Income
Housing Tax Credits (Internal Revenue Code section 42)
and/or financed by Tax-Exempt Private Activity Bonds
issued by states (Internal Revenue Code section 142).
The rents of MTSPs were tied to Section 8 income
limits and a decrease would jeopardize the financial
feasibility of existing housing projects. The Housing
and Economic Recovery Act of 2008 changed the tax code
to protect existing MTSPs from decreases in income
limits and rents by creating project-level hold-
harmless calculation of income limits for existing
MTSPs, thus obviating the need for HUD to continue the
hold-harmless policy for the benefit of MTSPs.
 
Maintaining artificially high-income limits has had an
adverse impact on other federal programs. Higher
income limits increase the number of eligible
participants, making it harder to target limited HUD
resources to those most in need. More than 99 percent
of HUD-assisted households have incomes below the
extremely low-income level (30 percent of area median
family income), so modest decreases in the Section 8
income limits from these changes would have minimal
impact on families residing in assisted housing.
However, there are many other programs that use HUD's
Section 8 income limits to determine program
eligibility and these programs may benefit from the
proposed change. A listing of these programs is in the
notice (www.huduser.gov/datasets/il/incomelimits_hh_fr.pdf),
with more detail available
at www.huduser.gov/datasets/il/il09/IncomeLimitsBriefingMaterial_FY09.pdf.
 
A 30-day comment period has been provided, ending
October 14, 2009. Any change in HUD's policy in this
regard would become effective only upon publication of
a future notice by HUD.
 
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