USDepartmentofHousingandUrbanDevelopment - PDF document

1 U.S.DepartmentofHousingandUrbanDevelopme
U.S.DepartmentofHousingandUrbanDevelopment _______________________________________________________________ SpecialAttentionof: NOTICE PDR-2015-02 RegionalDirectors,FieldOfficeDirectors, Economists,Public&IndianHousingIssued:March6,2015 DivisionDirectors,MultifamilyHubDirectors,Expires:Effectiveuntilsuperseded MultifamilyProgramCenterDirectors ____________________________ CrossReferences: ________________________________________________________________ Subject:TransmittalofFiscalYear(FY)2015IncomeLimits forthePublicHousingandSection8Programs Thisnoticetransmitsrevisionsintheincomelimitsusedtodefinetheterms“verylow- income”and“low-income”inaccordancewithSection3(b)(2)oftheUnitedStatesHousingActof 1937,asamended.Theseincomelimitsarelistedbydollaramountandfamilysize. BeginningwithFY2010IncomeLimitspublishedonMay14,2010,HUDeliminateditslong standing“holdharmless”policy 1 butlimitedallannualdecreasesto5percentandallannualincreasestothe greaterof5percentortwicethechangeinthenationalmedianfamilyincome(MFI).HUDhasmaintained theselimitstoincreasesanddecreasesinincomelimitsforFY2015.ForFY2015incomelimits,the nationalMFIincreasedbythreepercentcomparedwithFY2014,sothecaponincreasesissetat6percent. HUDSection8IncomeLimitsbeginwiththeproductionofMFIestimates.HUDusesthe Section8program’sFairMarketRent(FMR)areadefinitionsindevelopingMFIestimates,whichmeans thatincomeestimatesaredevelopedforeachmetropolitanarea,partsofsomemetropolitanareas,andeach nonmetropolitancounty.TherewerenochangestotheareadefinitionsusedincalculatingMFIbetween FY2014andFY2015.TheFY2015MFIestimatesarebasedonOfficeofManagementandBudget(OMB) metropolitanareadefinitionsasupdatedthroughDecember1,2009,andincludeHUDmodificationsthat werefirstusedinthedeterminationofFY2006FMRareas.TheFebruary28,2013,OMBAreadefinition updatehasnotbeenincorporatedduetothetimingofthereleaseandtheavailabilityofACSdata.HUDwill incorporatethesenewareadefinitionsintotheFY2016calculations.HUDSection8IncomeLimitsare calculatedforeveryFMRareawithadjustmentsforfamilysizeandforareasthathaveunusuallyhighorlow income-to-housing-costrelationships. 1 HUD’s“holdharmless”policymaintainedSection8incomelimitsforcertainareasatpreviouslypublishedlevelswhen reductionswouldotherwisehaveresultedfromchangesinmedianfamilyincomeestimates,housingcostadjustmentdata,MFI updatemethodology,incomelimitmethodology,ormetropolitanareadefinitions. 2 The2008-2012,5-yearAmericanCommunitySurvey(ACS)orPuertoRicoCommunitySurvey (PRCS)incomedataarethebasisofFY2015IncomeLimitsforallareasofgeography,exceptfortheU.S. VirginIslandsandthePacificIslands.AConsumerPriceIndexforecastpublishedbytheCongressional BudgetOffice(CBO)isusedtobringthedatafrommid-2012tothemid-pointofthefiscalyear,April,2015. PublicHousing/Section8IncomeLimitsareusedtodeterminetheincomeeligibilityof applicantsforthePublicHousing,Section8,andotherprogramssubjecttoSection3(b)(2).The revisedincomelimitsarebasedonHUDestimatesofMFIforFY2015. Themostimportantstatutoryprovisionsrelatingtoincomelimitsareasfollows: - verylow-incomeisdefinedas50percentoftheMFIforthearea,subjecttospecified adjustmentsforareaswithunusuallyhighorlowincomesrelativetohousingcosts; - low-incomeisdefinedas80percentoftheMFIforthearea,subjecttoadjustmentsfor areaswithunusuallyhighorlowincomesorhousingcosts; - extremelylow-incomeisdefinedasanincometargetingstandardinthe1998Amendmentsto theHousingActof1937;toavoidinconsistencieswithotherincomelimits,itisdefinedas 60percentofthefour-personfamilyverylow-incomelimit,adjustedforfamilysize,but undertheConsolidatedAppropriationsAct,2014notallowedtofallbelowthepoverty guidelinesasdeterminedbytheDepartmentofHealthandHumanServices; - wheretheareaincomelimitislessthanthestatenonmetropolitanMFI,incomelimitsare basedonthestatenonmetropolitanmedian;and - incomelimitsareadjustedforfamilysizesothatlargerfamilieshavehigherincomelimits. VeryLow-IncomeLimits: HUDcalculatesverylow-incomelimitsusingasetofformulaeasfollows.Thefirststepin calculatingverylow-incomelimitsistode

2 terminewhattheywouldbeifthefour-personli
terminewhattheywouldbeifthefour-personlimitisbasedon 50percentoftheestimatedareamedianincome.Adjustmentsarethenmadeifthisnumberisoutside formulaconstraints. Morespecifically,theverylow-incomelimitfora4-personfamilyiscalculatedasfollows: (1)50percentoftheareaMFIiscalculatedandtentativelysetasthe4-personfamilyincome limit; (2)aminimum4-personincomelimitisestablishedattheamountrequiredtoafforda2-bedroom unitrentingat85percentofthe40 th percentilerentif35percentofincomeisusedforrent (thisadjustsincomelimitsupwardforareaswhererentalhousingcostsareunusuallyhighin relationtotheMFI; (3)amaximum4-personincomelimitiscalculatedasthegreaterof80percentoftheU.S.MFI ortheincomeneededtoafforda2-bedroomunitrentingat100percentofthe40 th percentile 3 rentif30percentofincomeisusedforrent(thisadjustsincomelimitsdownwardforareas withunusuallyhighincomesandrelativelymoderaterentalhousingcosts); (4)innoinstanceareincomelimitslessthanifbasedonthestatenonmetropolitanMFIlevel (evenifthestep2calculationproducesaloweramount); (5)any4-personincomelimitthathasdeclinedbymorethan5percentisraisedto5percent belowlastyear’sincomelimitandanyincomelimitthathasincreasedmorethan5percentis loweredto5percentoflastyear’sincomelimit,theremainderofthisdecrease/increasetobe implementednextyeariftheunderlyingdatawarrant.Inanyyearthattwicethenational changeinmedianfamilyincomesisgreaterthan5percent,limitswillbeallowedtoincrease uptothatlevelifsowarrantedbythelocaldata.ForFY2015incomelimits,thenational MFIincreasedbythreepercentcomparedwithFY2014,sothecaponincreasesissetat 6percent. Low-IncomeLimits: Mostfour-personlow-incomelimitsarethegreaterof:80percentoftheareaMFI,or80percentof thestatenonmetropolitanMFIlevel.Becausetheverylow-incomelimitsarenotalwaysbasedon50percent ofmedian,however,calculatinglow-incomelimitsas80percentofmedianwouldproduceanomalies inconsistentwithstatutoryintent(e.g.,verylow-incomelimitscouldbehigherthanlow-incomelimits).To eliminatethisproblem,thenormalcalculationistosetthefour-personlow-incomelimitat1.6(i.e., 80percent/50percent)timestherelevantfour-personverylow-incomelimit.Thetwoexceptionstothis practicearethattheresultingincomelimitisnotallowedtoexceedtheU.S.MFIlevel($65,800for FY2015)exceptwhenjustifiedbyhighhousingcosts;andonceadjusted,thefourpersonlow-incomelimit decreaseislimitedto5percentor,ifincreasing,cappedatthegreaterof5percentortwicethenational changeinMFI.Useofverylow-incomelimitsasastartingpointforcalculatingotherincomelimitshasthe effectofadjustinglow-incomelimitsinareaswheretheverylow-incomelimitshavebeenadjustedbecause ofunusuallyhighorlowhousing-cost-to-incomerelationships. ExtremelyLow-IncomeLimits: The,ConsolidatedAppropriationsAct,2014amendedSec.238.(a)Section3(b)oftheUnitedStates HousingActof1937(42U.S.C.1437a)asfollows: (C)Thetermextremelylow-incomefamiliesmeansverylow-incomefamilieswhoseincomesdonot exceedthehigherof— (i) ThepovertyguidelinesupdatedperiodicallybytheDepartmentofHealthandHuman Servicesundertheauthorityofsection673(2)oftheCommunityServicesBlockGrant Actapplicabletoafamilyofthesizeinvolved(exceptthatthisclauseshallnotapply inthecaseofpublichousingagenciesorprojectslocatedinPuertoRicooranyother territoryorpossessionoftheUnitedStates);or 4 (ii) 30percentofthemedianfamilyincomeforthearea,asdeterminedbytheSecretary, withadjustmentsforsmallerandlargerfamilies(exceptthattheSecretarymay establishincomeceilingshigherorlowerthan30percentofthemedianforthearea onthebasisoftheSecretary’sfindingthatsuchvariationsarenecessarybecauseof unusuallyhighorlowfamilyincomes). HUDcalculatedtheextremelylow-incomelimitsforallareasintheU.S.usingthe2015Poverty Guidelinesforthe48contiguousstatesandtheDistrictofColumbia(Lower-48States),forAlaskaandfor Hawaii.ThesepovertyguidelineswerepublishedintheFederalRegisterbyHHSonJanuary22,2015. FamilySizeAdjustments: Bystatute,familysizeadjustmentsarerequiredtoprovidehigherincomelimitsforlargerfamilies andlowerincomelimitsforsmallerfamilies.Thefactorsusedareasfollows: NumberofPersonsinFamilyandPercentageAdjustments 1234567

3 8 70%80%90%Base108%116%124%132% 5 Income
8 70%80%90%Base108%116%124%132% 5 Incomelimitsforfamilieswithmorethan8personsarenotincludedintheprintedlistsbecauseof spacelimitations.Foreachpersoninexcessof8,theincomelimitforsuchhouseholdsiscomputedby addinganadditionaleightpercenttothe4-personbase.The9-personincomelimit,forexample,issetat 140(132+8)percentoftherelevantfour-personincomelimit.Localagenciesmayroundincomelimitsfor 9ormorepersonstothenearest$50,ormayusetheun-roundednumbers.Familysize-adjustedincome limitsarenotre-testedforcompliancewiththe5percentrule.Roundinganomaliesproducesomefamily size-adjustedincomelimitswhoseannualchangeisslightlylargerorsmallerthan5percent. FY2015incomelimitsareavailableinmultipleformatsandavailableat http://www.huduser.org/portal/datasets/il.html .Questionsrelatedtohowtheseincomelimitsapplytothe programsofstateandotherfederalagenciesshouldbereferredtothoseagencies.Questionsconcerningthe methodologyusedtodeveloptheseincomelimitsareaddressedintheFY2015IncomeLimitsBriefing Material,whichispostedontheincomelimitswebsite. _______ /S/ _______________ _______/S/__________________ BiniamGebre JemineA.Bryon ActingAssistantSecretaryfor ActingAssistantSecretaryfor Housing-FederalHousing PublicandIndianHousing,P Commissioner,H ��5 &#x/MCI; 0 ;&#x/MCI; 0 ;Income limits for families with more than 8 persons are not included in the printed lists because of space limitations. For each person in excess of 8, the income limit for such households is computed by adding an additional eight percent to the 4-person base. The 9-person income limit, for example, is set at 140 (132 + 8) percent of the relevant four-person income limit. Local agencies may round income limits for 9 or more persons to the nearest $50, or may use the un-rounded numbers. Family size-adjusted income limits are not re-tested for compliance with the 5 percent rule. Rounding anomalies produce some family size-adjusted income limits whose annual change is slightly larger or smaller than 5 percent. FY 2015 income limits are available in multiple formats and available at http://www.huduser.org/portal/datasets/il.html. Questions related to how these income limits apply to the programs of state and other federal agencies should be referred to those agencies. Questions concerning the methodology used to develop these income limits are addressed in the FY 2015 Income Limits Briefing Material, which is posted on the income limits website. /S/_______________ _______/S/__________________ Biniam Gebre Jemine A. Bryon Acting Assistant Secretary for Acting Assistant Secretary for Housing-Federal Housing Public and Indian Housing, P Commissioner, H ��4 &#x/MCI; 0 ;&#x/MCI; 0 ;(ii)30 percent of the median family income for the area, as determined by the Secretary, with adjustments for smaller and larger families (except that the Secretary may establish income ceilings higher or lower than 30 percent of the median for the area on the basis of the Secretary’s finding that such variations are necessary because of unusually high or low family incomes). HUD calculated the extremely low-income limits for all areas in the U.S. using the 2015 Poverty Guidelines for the 48 contiguous states and the District of Columbia (Lower-48 States), for Alaska and for Hawaii. These poverty guidelines were published in the Federal Register by HHS on January 22, 2015. Family Size Adjustments: By statute, family size adjustments are required to provide higher income limits for larger families and lower income limits for smaller families. The factors used are as follows: Number of Persons in Family and Percentage Adjustments 1 2345678 70% 80% 90% Base 108% 116% 124% 132% ____________________________ U. S. Department of Housing and Urban Development Special Attention of: NOTICE PDR-2015-02 Regional Directors, Field Office Directors,Economists, Public & Indian Housing Issued: March 6, 2015Division Directors, Multifamily Hub Directors, Expires: Effective until supersededMultifamily Program Center DirectorsCross Referenc

4 es: Subject: Transmittal of Fiscal Year
es: Subject: Transmittal of Fiscal Year (FY) 2015 Income Limits for the Public Housing and Section 8 Programs This notice transmits revisions in the income limits used to define the terms “very low-income” and “low-income” in accordance with Section 3(b)(2) of the United States Housing Act of 1937, as amended. These income limits are listed by dollar amount and family size. Beginning with FY 2010 Income Limits published on May 14, 2010, HUD eliminated its long standing “hold harmless” policybut limited all annual decreases to 5 percent and all annual increases to the greater of 5 percent or twice the change in the national median family income (MFI). HUD has maintained these limits to increases and decreases in income limits for FY 2015. For FY 2015 income limits, the national MFI increased by three percent compared with FY 2014, so the cap on increases is set at 6 percent. HUD Section 8 Income Limits begin with the production of MFI estimates. HUD uses the Section 8 program’s Fair Market Rent (FMR) area definitions in developing MFI estimates, which means that income estimates are developed for each metropolitan area, parts of some metropolitan areas, and each nonmetropolitan county. There were no changes to the area definitions used in calculating MFI between FY 2014 and FY 2015. The FY 2015 MFI estimates are based on Office of Management and Budget (OMB) metropolitan area definitions as updated through December 1, 2009, and include HUD modifications that were first used in the determination of FY 2006 FMR areas. The February 28, 2013, OMB Area definition update has not been incorporated due to the timing of the release and the availability of ACS data. HUD will incorporate these new area definitions into the FY 2016 calculations. HUD Section 8 Income Limits are calculated for every FMR area with adjustments for family size and for areas that have unusually high or low income-to-housing-cost relationships. HUD’s “hold harmless” policy maintained Section 8 income limits for certain areas at previously published levels when reductions would otherwise have resulted from changes in median family income estimates, housing cost adjustment data, MFI update methodology, income limit methodology, or metropolitan area definitions. ��3 &#x/MCI; 0 ;&#x/MCI; 0 ;rent if 30 percent of income is used for rent (this adjusts income limits downward for areas with unusually high incomes and relatively moderate rental housing costs); (4)in no instance are income limits less than if based on the state nonmetropolitan MFI level (even if the step 2 calculation produces a lower amount); (5)any 4-person income limit that has declined by more than 5 percent is raised to 5 percent below last year’s income limit and any income limit that has increased more than 5 percent is lowered to 5 percent of last year’s income limit, the remainder of this decrease/increase to be implemented next year if the underlying data warrant. In any year that twice the national change in median family incomes is greater than 5 percent, limits will be allowed to increase up to that level if so warranted by the local data. For FY 2015 income limits, the national MFI increased by three percent compared with FY 2014, so the cap on increases is set at 6 percent. Low-Income Limits: Most four-person low-income limits are the greater of: 80 percent of the area MFI, or 80 percent of the state nonmetropolitan MFI level. Because the very low-income limits are not always based on 50 percent of median, however, calculating low-income limits as 80 percent of median would produce anomalies inconsistent with statutory intent (e.g., very low-income limits could be higher than low-income limits). To eliminate this problem, the normal calculation is to set the four-person low-income limit at 1.6 (i.e., 80 percent/50 percent) times the relevant four-person very low-income limit. The two exceptions to this practice are that the resulting income limit is no

5 t allowed to exceed the U.S. MFI level (
t allowed to exceed the U.S. MFI level ($65,800 for FY 2015) except when justified by high housing costs; and once adjusted, the four person low-income limit decrease is limited to 5 percent or, if increasing, capped at the greater of 5 percent or twice the national change in MFI. Use of very low-income limits as a starting point for calculating other income limits has the effect of adjusting low-income limits in areas where the very low-income limits have been adjusted because of unusually high or low housing-cost-to-income relationships. Extremely Low-Income Limits: The, Consolidated Appropriations Act, 2014amended Sec. 238. (a) Section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a) as follows: (C) The term extremely low-income families means very low-income families whose incomes do not exceed the higher of— (i)The poverty guidelines updated periodically by the Department of Health and Human Services under the authority of section 673(2) of the Community Services Block Grant Act applicable to a family of the size involved (except that this clause shall not apply in the case of public housing agencies or projects located in Puerto Rico or any other territory or possession of the United States); or ��2 &#x/MCI; 0 ;&#x/MCI; 0 ;The 2008-2012, 5-year American Community Survey (ACS) or Puerto Rico Community Survey (PRCS) income data are the basis of FY 2015 Income Limits for all areas of geography, except for the U.S. Virgin Islands and the Pacific Islands. A Consumer Price Index forecast published by the Congressional Budget Office (CBO) is used to bring the data from mid-2012 to the mid-point of the fiscal year, April, 2015. Public Housing/Section 8 Income Limits are used to determine the income eligibility of applicants for the Public Housing, Section 8, and other programs subject to Section 3(b)(2). The revised income limits are based on HUD estimates of MFI for FY 2015. The most important statutory provisions relating to income limits are as follows: very low-income is defined as 50 percent of the MFI for the area, subject to specified adjustments for areas with unusually high or low incomes relative to housing costs; low-income is defined as 80 percent of the MFI for the area, subject to adjustments for areas with unusually high or low incomes or housing costs; extremely low-income is defined as an income targeting standard in the 1998 Amendments to the Housing Act of 1937; to avoid inconsistencies with other income limits, it is defined as 60 percent of the four-person family very low-income limit, adjusted for family size, but under the Consolidated Appropriations Act, 2014 not allowed to fall below the poverty guidelines as determined by the Department of Health and Human Services; -where the area income limit is less than the state nonmetropolitan MFI, income limits are based on the state nonmetropolitan median; and income limits are adjusted for family size so that larger families have higher income limits. Very Low-Income Limits: HUD calculates very low-income limits using a set of formulae as follows. The first step in calculating very low-income limits is to determine what they would be if the four-person limit is based on 50 percent of the estimated area median income. Adjustments are then made if this number is outside formula constraints. More specifically, the very low-income limit for a 4-person family is calculated as follows: (1)50 percent of the area MFI is calculated and tentatively set as the 4-person family income limit; (2)a minimum 4-person income limit is established at the amount required to afford a 2-bedroom unit renting at 85 percent of the 40th percentile rent if 35 percent of income is used for rent (this adjusts income limits upward for areas where rental housing costs are unusually high in relation to the MFI; (3)a maximum 4-person income limit is calculated as the greater of 80 percent of the U.S. MFI or the income needed to afford a 2-bedroom unit renting at 100 percent of the 40th percenti