On July 14, the US Senate passed HR 3700 before the Congress adjourned for the seven-week summer recess. The US House passed its version, introduced by Congressman Blaine Luetkemeyer (R – MO) on February 2, 2016.
The Housing Opportunities Through Modernization Act (HR 3700) provides the first comprehensive update to the nation’s low-income housing programs in 18 years. The bill will improve federal rental assistance programs while retaining the core characteristics that make them effective, such as rules targeting most assistance on the neediest families and income-based rents that ensure that even very poor families can keep a roof over their heads.
Important aspects of the bill include:
Income Deductions: HR 3700 would change how resident incomes are calculated and their rents are determined in the public housing, housing choice voucher and project-based rental assistance programs. Current law allows heads of households who are elderly or who have a disability to deduct medical expenses and certain disability assistance expenses above three percent of their income from their total income for purposes of determining rent. HR 3700 would increase the threshold over which such households can deduct medical and care expenses from 3 percent to 10 percent. Currently each household with a head of household who is elderly or has a disability receives a standard annual income deduction of $400. HR 3700 would increase the standard deduction for such households from $400 to $525 and index the value of the standard deduction to inflation.
Project-based Vouchers: HR 3700 would also make improvements to the project-basing of housing choice vouchers (HCVs). The bill would give public housing agencies (PHAs) the flexibility to increase project-basing by an additional 10 percent to serve households in areas where vouchers are difficult to use. The bill also allows PHAs to commit project-based vouchers for 20 years — a 5-year increase from current law.
Over-income Tenants: The bill would impose limits on public housing assistance for households with incomes above 120 percent of area median income (AMI). Under current law, when a household’s income is above 120 percent AMI for two consecutive years, the PHA would be required to either terminate the household’s assistance within six months or charge the household rent equal to the higher of the fair market rent or the costs of operating and capital subsidies provided for that unit.
Rent Setting: HR 3700 would require that rents be based on residents’ prior year income, except when setting initial rents. Residents whose incomes increase in a given year would not have their rents adjusted until the next annual re-certification. The bill also limits the frequency of interim income reviews. PHAs would be required to re-certify incomes and adjust rents when a household’s income decreases by 10 percent or more. The bill excludes interim income reviews when the increase if from earnings.
The bill is currently awaiting President Obama’s signature to become law. The US Department of Housing and Urban Development (HUD) will be developing and promulgating rules to implement the tenets of this legislation once enacted.
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