The Matter of Public Housing and Income Levels Is, Well, Complicated

The Housing and Urban Development Department plans to issue additional guidance this fall encouraging local housing authorities to reduce the number of over-income residents living in public housing, according to a HUD spokesman.

“We've been working on measures to address this issue for some time already,” said spokesman Cameron French in an email.

A recent audit by the department’s inspector general found that roughly 25,226 families in public housing earned more than the 2014 income eligibility limits established by HUD – a legal, though somewhat controversial, practice. Under the law, once accepted into public housing, individual households and families can stay as long as they like regardless of increased earnings, provided they comply with rental agreements and remain good tenants.

“We are directly engaged in conversations with the housing authorities identified within the audit as having residents who were over the income limit,” French said.

The watchdog’s report sparked controversy because it included some extreme examples of over-income families living in public housing. In one case in New York City, a family of four who have been living in public housing since 1988 had an annual household income of $497,911 in 2013. But the number of over-income residents identified in the audit represented just 2.6 percent of all public housing households; in most cases the families in question were over-income by less than $10,000. The term “over-income” applies to those public housing households that earn more than the income threshold established for their locality.

“In the scheme of things, it is a minor problem,” said Sheila Crowley, president and CEO of the National Low-Income Housing Coalition.

Crowley said the “massive backlog” in the program that provides funding to public housing authorities for the development, financing and repair of subsidized units is a much bigger issue contributing to the lack of affordable housing and long waiting lists across the country. Crowley also pointed out that once a family in public housing becomes over-income, they no longer receive a subsidy from the government for their rent, paying the unit’s full rent themselves.

Many PHAs count on that money from over-income families to help boost their budgets. While HUD oversees PHAs, they are administered by states and localities, and are similar in structure to a school district. HUD told auditors that if all over-income families were removed from public housing, it would need to request “nearly $116.5 million more in public housing operating subsidies annually,” according to the IG report. The presence of such households also helps de-concentrate poverty in public housing and create sustainable mixed-income communities, according to HUD, PHAs and affordable housing advocates.

“The irony is that the new model everyone touts is mixed-income housing, and this is naturally occurring,” Crowley said. “The idea is that you are supposed to get a better job and an education so you can pay your full fare. The point is to end the subsidy, not the housing.” In other words, evicting public housing residents who become over-income can destabilize properties and create a disincentive for those trying to lift themselves out of poverty.

Still, the audit and subsequent media coverage of the issue have captured the attention of some lawmakers, including Florida Republican Rep. David Jolly and Senate Democrat Tim Kaine of Virginia. Jolly, a member of the House Appropriations Committee, sent HUD Secretary Julian Castro a letter on Aug. 18 asking him to “immediately consider changes to department policy that take seriously this recent report by the inspector general.” Jolly referred to the report’s examples of over-income families living in public housing as “waste, fraud and abuse.”

But HUD can only do so much. Ultimately Congress will have to change the law if it decides it doesn’t want over-income families remaining in public housing.

“HUD is currently exploring options within our existing authority and expects to have ongoing conversations with Congress about this issue,” French said.

Crowley said she believes HUD “will do something that will quell the unrest” in Congress, but she also said there’s nothing to prevent lawmakers who “don’t like public housing” from drafting proposals to change the law on over-income families.

“Practically all housing is subsidized in some way,” Crowley noted. “It’s not like they [over-income families in public housing] are getting away with something. It’s perfectly legal to improve their economic well-being and continue to live in the community that they live in.”