HUD PIH Issues Guidance Implementing HOTMA’s Section 103 Public Housing Over-Income Rule

HUD’s Office of Public and Indian Housing (PIH) issued Notice PIH-2023-03, which provides guidance on the implementation of Section 103, the “over-income” provision of the “Housing Opportunity Through Modernization Act of 2016” (HOTMA). Section 103 established new limits regarding whether a public housing household can continue living in public housing if its income exceeds a maximum set by the final rule. A final rule implementing Section 103, as well as two other HOTMA provisions, were published in the Federal Register on February 14 (see Memo, 2/27). The over-income provisions are included in a new section of the public housing regulations at 24 CFR 960.507.

According to the statute, after a household’s income has exceeded the over-income limit for 24 consecutive months (the “grace period”), a public housing agency (PHA) must either terminate the household’s public housing tenancy within six months or charge the household an alternative non-public housing rent (“alternative rent”). The alternative rent must equal the greater of the Fair Market Rent (FMR) or the amount of monthly subsidy provided for the unit as determined by the amount of Operating and Capital Funds apportioned to a unit. Section 103 applies to all PHAs with 250 or more public housing units, including so-called Moving to Work (MTW) PHAs. However, for MTW PHAs, the “grace period” is three years, which can be further extended if HUD approves.

The over-income limit (“OI limit”) is determined by applying a factor of 2.4 to the income limit for a “very low-income” (VLI) household. VLI varies by jurisdiction and by household size, so each PHA must calculate the OI limit for households of each size occupying their units. The OI limit must then be compared to a household’s annual income during an annual or interim income examination. If the household’s annual income is greater than the OI limit, then it exceeds the OI limit for the program. This is a change from the guidance provided in Notice PIH 2019-11, which instructed PHAs to compare the OI limit to the family’s adjusted income. A PHA must update OI limits in its Admissions and Continued Occupancy Policies (ACOP) no later than 60 days after HUD publishes new income limits each year.

Once a family is determined to be over-income, a PHA must notify the household. Notice PIH 2023-03 requires three written notices, while Notice PIH-2019-11 only required two.

  • A PHA must provide written notice to an OI household no later than 30 days after a household’s annual income or an interim reexamination indicates that the household is OI. The notice must inform the household that its income exceeds the over-income limit, and that if it continues to exceed the OI limit for 24 consecutive months, either the household’s public housing lease will be terminated, or the household can remain in its unit but has to pay the alternate, non-public housing rent – depending on which approach is established in the PHA’s ACOP.
  • If a household’s income annual reexamination 12 months later shows that it has continued to exceed the OI limit for 12 consecutive months, a PHA must again notify the household in writing no later than 30 days. The notice must inform the household that its income still exceeds the OI limit, and that if the household’s income continues to exceed the OI limit for another 12 consecutive months, the household’s tenancy will either be terminated or the household will have to pay the higher alternative rent, depending on the PHA’s continued occupancy policy in its ACOP. This notice should include an estimated alternative rent if applicable.
  • If a household’s income annual reexamination shows that it continues to exceed the over-income limit for 24 consecutive months after the initial OI determination, then a PHA must once more provide written notice to the household no later than 30 days. The notice must inform the household that its income has exceeded the over-income limit for 24 consecutive months, and that the PHA will either terminate the household’s tenancy (in no more than six months) or charge the household the alternative rent (at the next lease renewal or in no more than 60 days after the date of the final notice, whichever is sooner), depending on the PHA’s continued occupancy policies.

If as a result of an annual or interim income reexamination during the 24-month grace period, an over-income household’s income falls below the OI limit, the household is no longer over-income and is entitled to a new 24 consecutive month grace period if the household’s income once again exceeds the OI limit.

If a PHA’s policy is to allow an OI household to pay the non-public housing alternative rent, then the PHA may no longer conduct an annual reexamination. The PHA may offer the household grievance or hearing procedures as if it were public housing-assisted. However, these so-called “non-public housing over income” (NPHOI) households cannot participate on a resident council or receive a HUD utility allowance. Once an NPHOI household has a new lease from the PHA, it may only be readmitted to the public housing program if the household becomes income-eligible again. A PHA may choose to adopt a new local preference for readmitting an NPHOI household. Notice PIH-2023-03 reminds PHAs that if their policy is to terminate OI households, a PHA can terminate the household in less than six months if it chooses to do so.

HOTMA requires PHAs to report each year the total number of OI households living in public housing and the total number of households on a PHA’s public housing waiting list. The number of households living in public housing with income exceeding the over-income limitation will include the number of households in the 24 consecutive month grace period, the number in the period before termination, and the number of NPHOI families paying the alternative rent.

Read Notice PIH-2023-03 at:

Read more about public housing on page 4-32 of NLIHC’s 2023 Advocates’ Guide.