81 FR 85996 - Housing Opportunity Through Modernization Act of 2016: Solicitation of Comments on Implementation of Public Housing Income Limit

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 81, Issue 229 (November 29, 2016)

On July 29, 2016, President Obama signed into law the Housing Opportunity Through Modernization Act of 2016 (HOTMA). One of the statutory amendments made by HOTMA adds an income limit to the Public Housing program. This notice informs the public of how HUD proposes to implement that income limit and solicits comments on that methodology.

[Federal Register Volume 81, Number 229 (Tuesday, November 29, 2016)]
[Notices]
[Pages 85996-85997]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-28593]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5976-N-02]


Housing Opportunity Through Modernization Act of 2016: 
Solicitation of Comments on Implementation of Public Housing Income 
Limit

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Notice for comment.

-----------------------------------------------------------------------

SUMMARY: On July 29, 2016, President Obama signed into law the Housing 
Opportunity Through Modernization Act of 2016 (HOTMA). One of the 
statutory amendments made by HOTMA adds an income limit to the Public 
Housing program. This notice informs the public of how HUD proposes to 
implement that income limit and solicits comments on that methodology.

DATES: Comment Due Date: December 29, 2016.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice for comment. All communications must refer to the above 
docket number and title. There are two methods for submitting public 
comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m., weekdays, at 
the above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number via TTY by calling the Federal Relay Service at 
800-877-8339 (this is a toll-free number). Copies of all comments 
submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: If you have any questions, please send 
an email to [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    On July 29, 2016, President Obama signed HOTMA into law (Pub. L. 
114-201, 130 Stat. 782). Section 103 places an income limitation on a 
public housing tenancy for families. The law requires that after a 
family's income has exceeded 120 percent of the area median income 
(AMI) for the most recent two consecutive annual reviews, a PHA must 
terminate the family's tenancy within 6 months of the second income 
determination or charge the family a monthly rent equal to the greater 
of (1) the applicable Fair Market Rent (FMR); or (2) the amount of 
monthly subsidy for the unit including amounts from the operating and 
capital fund. A PHA must notify a family of the potential changes to 
monthly rent after one year of the family's income exceeding 120 
percent of the AMI. Pursuant to 24 CFR 960.503, this section does not 
apply to small PHAs that are renting to families with income over 120 
percent of AMI. Each PHA must submit a report annually to HUD about the 
number of families residing in public housing with incomes exceeding 
the applicable income limitation and the number of families on the 
waiting lists for admission to public housing projects. Such reports 
must be publically available.
    Section 103 of HOTMA sets a maximum amount of annual adjusted 
income for a family to occupy a public housing unit at 120 percent of 
the AMI. However, HUD has the ability to adjust that 120 percent if the 
Secretary determines that it is necessary to do so because of 
prevailing levels of construction costs, or unusually high or low 
family incomes, vacancy rates, or rental costs.
    On February 3, 2016, at 81 FR 5677, HUD published an advanced 
notice of proposed rulemaking (ANPR) soliciting public input on various 
questions dealing with the possibility of imposing an income limit for 
public housing.\1\ HUD received 135 comments on the ANPR, from 
individuals, PHAs, tenant advocacy groups, and PHA associations. Some 
opposed an income limit, stating that public housing residents benefit 
from being in mixed-income developments, and that imposing an income 
limit that would apply to everyone would be unfair in areas with high 
rents or low demand for the public housing units. Other commenters 
supported an income limit, stating that encouraging families to move 
out when their income reached a certain level would allow families in 
the most need to move into decent and affordable units.
---------------------------------------------------------------------------

    \1\ The comment period was originally 30 days, but the comment 
period was re-opened for an additional 30 days at 81 FR 12613.
---------------------------------------------------------------------------

    There were also many suggestions on how to impose an income limit. 
Commenters asked for a maximum income based on the AMI or a percentage 
over the income limits for admission into public housing. Some 
commenters said that incorporating local housing conditions into the 
income limit would be too complicated, while others stated that not 
taking local conditions into account would be unfair to families. Some 
commenters stated that families reaching an income limit should be 
given a few months to find new housing, while others suggested families 
be allowed a period of several years. Some commenters noted that having 
an income limit did allow families with a greater need to move in, 
while others wrote that forcing the highest-income tenants out would 
increase the amount of subsidy a PHA would pay and decrease their 
ability to provide affordable housing.
    Some of these comments and questions were made moot by the passage 
of HOTMA. However, as HUD exercises the discretion available in the new 
statute, HUD has taken into account the views and suggestions already 
submitted for the ANPR in its initial methodology factoring in local 
housing costs. HUD is providing for 30 days of public comment.

[[Page 85997]]

II. Proposed Method of Determining Income Limit

    HUD calculates low-, very low-, and extremely low-income limits for 
the public housing program. These income limits are used for assessing 
program eligibility. Very low-income (VLI) limits are preliminarily 
calculated as 50 percent of the estimated area median family income. 
VLI limits include several adjustments to align the income limits with 
program requirements including:
    1. High Housing Cost Adjustment. The 4-Person VLI limit is 
increased if it would otherwise be less than the amount at which 35 
percent of it equals 85 percent of the annualized two-bedroom Section 8 
40th percentile FMR (this adjusts income limits upward for areas where 
rental housing costs are unusually high in relation to median income).
    2. Low Housing Cost Adjustment. If the 4-person VLI limit exceeds 
80 percent of the U.S. median family income, and the two bedroom 40th 
percentile FMR is affordable (less than or equal to 30 percent of the 
preliminary VLI limit), the VLI limit will be reduced to the greater of 
80 percent of U.S. median family income or the amount at which 30 
percent of it equals the two-bedroom 40th percentile FMR. This adjusts 
income limits downward for areas of unusually high median family 
incomes.
    3. State Non-Metro Median Family Income Adjustment. The 4-person 
VLI limit is also adjusted if it would otherwise be lower than 50 
percent of the State non-metro median family income; and
    4. Ceilings and Floors for Changes. In lieu of holding income 
limits harmless, HUD does not allow income limits to decrease or 
increase more than 5 percent. The VLI limits are calculated for every 
FMR area, so there may be subareas for metropolitan statistical areas 
(MSAs).
    For the purpose of determining the income limit, including any 
adjustments, HUD will use the VLI limit as the basis of the 120 percent 
income limit (by multiplying the VLI limit by a factor of 2.4). For 
those areas without an adjustment, the result is an income limit of 120 
percent of AMI. For areas where HUD has made an adjustment to the VLI 
limit, the result of the multiplier will be higher or lower than 120 
percent of AMI, depending on the adjustments made. For example, for the 
Los Angeles MSA, HUD's income limit methodology results in a high 
housing cost adjustment, therefore, the income limit for families 
residing in this area is 167 percent of AMI, due to the higher housing 
costs in this MSA.
    HUD's income limits were developed by HUD's Office of Policy 
Development and Research, and are updated annually. Information about 
HUD's income limits and HUD's methodology for adjusting income limits 
as part of the income limit calculation can be found at: https://www.huduser.gov//datasets/il/il16/index_il2016.html.

III. Request for Comments

    HUD is seeking comments on the methodology described above. 
Specifically, HUD seeks comments on the following questions:
    1. Does the methodology adequately consider local housing costs and 
make appropriate adjustments for higher housing costs?
    2. What other factors should HUD consider when determining whether 
to make adjustments to the income limit? Please provide specific 
examples of circumstances that are not captured in HUD's proposed 
methodology.

IV. Environmental Impact Certification

    This notice does not direct, provide for assistance or loan and 
mortgage insurance for, or otherwise govern or regulate real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction; or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
notice is categorically excluded from environmental review under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321).

    Dated: November 17, 2016.
Jemine Bryon,
General Deputy Assistant, Secretary for Public and Indian Housing.
[FR Doc. 2016-28593 Filed 11-28-16; 8:45 am]
BILLING CODE 4210-67-P