HUD’s Office of the Inspector General (OIG) found that 25,226 households living in public housing had income greater than the maximum allowed to qualify for initial admission to public housing, and that 17,761 earned more than the qualifying income limit for more than one year. OIG estimates that next year HUD will pay $104.4 million in operating subsidies for public housing occupied by over-income households, while many very low income households remain on waiting lists. OIG recommends that HUD direct public housing agencies (PHAs) to establish policies to reduce the number of over-income households living in public housing.
OIG notes that applicants for public housing must have income at or less than 80% of the area median income, but that there is no requirement for a household to move if income exceeds 80% after admission. HUD’s public housing rule gives PHAs the discretion to implement policies that would require over-income households to find housing in the unassisted market. However, OIG reports that the 15 PHAs it contacted for the review choose to allow over-income households to continue living in public housing. These PHAs stated that over-income households provide needed higher rent revenues for the PHA, offer self-sufficiency role models for other residents, and address HUD’s goal of reducing concentration of poverty.
Using HUD’s Public and Indian Housing Information Center (PIC) data submitted by 2,257 PHAs, OIG found 25,226 over-income households. Thirty-three percent had income between $10,001 and $30,000 greater than the income limit, 9% had income between $30,001 and $50,000 greater than the income limit, and the remaining 5% were greater still. Fifty-three percent had income up to $10,000 greater than the income limit.
Thirty percent of the over-income households were over-income for less than one year, while 23% were over-income between one and two years. However, 13% were over-income between three and four years, 14% were over-income between five and six years, 15% were over-income between seven and eight years, and 5% were over-income for nine or more years.
OIG comments that the Housing Choice Voucher program terminates a household’s voucher if the household can afford to pay an unassisted rent for 180 consecutive days. OIG does not expect HUD and PHAs to develop policies that would remove all over-income households from public housing, stating, “Any new policies should allow families sufficient time to become stable after becoming financially independent before their public housing assistance would be terminated.” OIG recommends policies to “avoid egregious cases.” The report cites four cases, a New York City household with $497,911 annual income, a Los Angeles household with $204,784 annual income, a New Bedford, MA household with $212,845 annual income, and an Oxford, NE household with assets valued at $1.6 million.
One of HUD’s responses to the OIG report states that if all over-income households were removed from public housing there would be a need to request $116.5 million more from Congress for public housing operating subsidies each year because the higher rents paid by over-income households reduce the amount of operating subsidies PHAs need. OIG acknowledges this economic consequence, but asserts that the loss in additional rents must be weighed against the cost of continuing to deny housing assistance to very low income households in need of assistance. The 15 PHAs contacted by OIG had 12,425 over-income households and 579,890 households on their public housing waiting lists.
Representative David Phil Roe (R-TN) from Kingsport requested the OIG review.
OIG Audit Report Number 2015-PH-0002, Overincome Families Residing in Public Housing Units, was published on July 21, 2015. It is available at https://www.hudoig.gov/reports-publications/audit-reports/overincome-families-resided-public-housing-units