Santa Monica City Council
April 12, 2022

CHAPTER 5 : BRIEFINGS AND VOUCHER ISSUANCE

INTRODUCTION
This chapter explains the briefing and voucher issuance process. When a family is determined to be eligible for the Housing Choice Voucher (HCV) program, the PHA must ensure that the family fully understands the way the program operates and the family’s obligations under the program. This is accomplished through both an oral briefing and provision of a briefing packet containing of the HUD-required documents and other information the family needs to know in order to lease a unit under the program. Once the family is fully informed of the program’s requirements, the PHA issues the family a voucher. The voucher includes the unit size for which the family qualifies based on the PHA’s subsidy standards, as well as the issue and expiration date of the voucher. The voucher is the document that authorizes the family to begin its search for a unit and limits the amount of time the family must successfully locate an acceptable unit.

This chapter describes HUD regulations and PHA policies related to these topics in two parts:

Part I: Briefings and Family Obligations. This part details the program’s requirements for briefing families orally, and for providing written materials describing the program and its requirements. It includes a focus on the family’s obligations under the program.

Part II: Subsidy Standards and Voucher Issuance. This part discusses the PHA’s standards for determining how many bedrooms a family of a given composition qualifies for, which in turn affects the amount of subsidy the family can receive. It also discusses the policies that dictate how vouchers are issued, and how long families must locate a unit.
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PART I: BRIEFINGS AND FAMILY OBLIGATIONS
5-I.A. OVERVIEW
HUD regulations require the PHA to conduct mandatory briefings for applicant families who qualify for a voucher. The briefing provides a broad description of owner and family responsibilities, explains the PHA’s procedures, and includes instructions on how to lease a unit.

This part describes how oral briefings will be conducted, specifies what written information will be provided to families via the SMHA website, and lists the family’s obligations under the program.
5-I.B. BRIEFING [24 CFR 982.301]
Notification of Briefing
Prior to issuance of a voucher, the PHA must give the family an oral briefing and provide the family with a briefing packet containing written information about the program. Families may be briefed in individual face-to-face meetings, through group briefing sessions, or via remote briefing sessions.

PHA Policy
Families will be notified of their eligibility for assistance at the time they are invited to a briefing. The notice will be sent by first class mail and will also be sent by email if the family has provided a valid email address to the PHA.

The notice will advise the family of the type of briefing, who is required to be present at the briefing, and the date and time of the briefing. The notice will also inform the family of any additional requirements for in-person or remote briefings as addressed in relevant policy elsewhere in this section.

If the notice is returned by the post office with no forwarding address, the applicant will be denied and their name will not be placed back on the waiting list. If the notice is returned by the post office with a forwarding address, the notice will be resent to the address indicated.

In-Person Briefing
At the briefing, the PHA must ensure effective communication in accordance with Section 504 requirements (Section 504 of the Rehabilitation Act of 1973) and ensure that the briefing site is accessible to individuals with disabilities. For a more thorough discussion of accessibility requirements, refer to Chapter 2.
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PHA Policy
Briefing packets containing written information about the program are available to participants online through their AssistanceCheck account. Paper copies are available for participants upon request.

In-person briefings will generally be conducted in group meetings. At the family’s written request, the PHA may provide an individual briefing.

The head of household is required to attend the briefing.

Families that attend group briefings and still need individual assistance will be referred to an appropriate PHA staff person.

Briefings will be conducted in English. For limited English proficient (LEP) applicants, the PHA will provide interpretation services free of charge in accordance with the PHA’s LEP plan (See Chapter 2).

Before and during the briefing process, SMHA will also provide translated copies of any documents considered to be “vital documents” in accordance with the SMHA LEP Plan.

Attendance
PHA Policy
Applicants who fail to attend a scheduled in-person briefing will be scheduled for another briefing automatically. The PHA will notify the family of the date and time of the second scheduled briefing. Applicants who fail to attend two scheduled briefings, without prior PHA approval, will be denied assistance (see Chapter 3).

Remote Briefings [Notice PIH 2020-32]
Remote briefings may be conducted over the phone, via video conferencing, or through other virtual platforms.

PHA Policy
The PHA has the sole discretion to require that briefings be conducted remotely in case of local, state, or national physical distancing orders, and in cases of inclement weather or natural disaster. If the PHA schedules a remote briefing, the PHA will conduct a faceto-face briefing upon request of the applicant as a reasonable accommodation for a person with a disability if safety and health concerns can be reasonably addressed.

In addition, the PHA will conduct a briefing remotely upon request of the applicant as a reasonable accommodation for a person with a disability, if an applicant does not have © Copyright 2021 Nan McKay & Associates, Inc.

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child care or transportation that would enable them to attend the briefing, or if the applicant believes an in-person briefing would create an undue health risk. The PHA will consider other reasonable requests for a remote briefing on a case-by-case basis.

Accessibility Requirements for Persons with Disabilities and LEP Individuals As with in-person briefings, the platform for conducting remote briefings must be accessible and the briefing conducted in accordance with Section 504 and accessibility requirements. This includes ensuring any information, websites, emails, digital notifications, and other virtual platforms are accessible for persons with vision, hearing, and other disabilities. Further, providing effective communication in a digital context may require the use of individualized auxiliary aids or services, such as audio description, captioning, sign language and other types of interpreters, keyboard accessibility, accessible documents, screen reader support, and transcripts. Auxiliary aids or services must be provided in accessible formats, in a timely manner, and in such a way to protect the privacy and independence of the individual.

If no method of conducting a remote briefing is available that appropriately accommodates an individual’s disability, the PHA may not hold against the individual his or her inability to participate in the remote briefing, and the PHA should consider whether postponing the remote briefing to a later date is appropriate or whether there is a suitable alternative.

Due to the individualized nature of disability, the appropriate auxiliary aid or service necessary, or reasonable accommodation, will depend on the specific circumstances.

Limited English Proficiency (LEP) requirements also apply to remote briefings, including the use of interpretation services and document translation. See Chapter 2 for a more thorough discussion of accessibility and LEP requirements, all of which apply in the context of remote briefings.

Conducting Remote Briefings
The PHA must ensure that the lack of technology or inability to use technology for remote briefings does not pose a disadvantage to families that may not be apparent to the PHA. The PHA must ensure that the family has appropriate technological access in order to fully participate in the remote briefing.

PHA Policy
At least 10 business days prior to scheduling the remote briefing, the PHA will provide written notification via first class mail and/or email to families participating in the briefing to advise of technological requirements and to request the family notify the PHA of any known barriers. If any family does not respond within five business days, or if the written notification is returned by the post office or the email is rejected, the PHA © Copyright 2021 Nan McKay & Associates, Inc.

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will contact the family by telephone to identify potential technological barriers and to determine which technology resources are accessible to the family. The PHA will resolve any barriers using the guidance in Section 6 of Notice PIH 2020-32, including offering the family the opportunity to attend an in-person briefing or have a one-on-one briefing over the phone, as appropriate.

The PHA will conduct remote briefings via a video conferencing platform when available.

If applicants are unable to adequately access the video conferencing platform, the briefing will be conducted by telephone conferencing call-in. If the family is unable to adequately access the telephone conferencing call-in, the remote briefing will be postponed, and an in-person alternative or one-on-one briefing over the phone will be provided.

The PHA will provide login information and/or conferencing call-in information and an electronic copy of the briefing packet via email at least five business days before the briefing. The PHA will provide a paper copy of the briefing packet upon family request, and may reschedule the briefing to allow adequate time for the family to receive the physical briefing packet.

The PHA will ensure that all electronic information stored or transmitted as part of the briefing meets the requirements for accessibility for persons with disabilities and persons with LEP, and is secure, including ensuring personally identifiable information (PII) is protected.

The PHA will ensure that families who participate in remote briefings have the opportunity to ask questions as part of the briefing.

If families lose connectivity during any remote briefing or otherwise feel they were unable to access information presented during the briefing, the family may request a one-on-one briefing over the phone or in person with the PHA.

Oral Briefing [24 CFR 982.301(a)]
Each briefing must provide information on the following subjects:
• How the Housing Choice Voucher program works;
• Family and owner responsibilities;
• Where the family can lease a unit, including renting a unit inside or outside the PHA’s jurisdiction;
• An explanation of how portability works. The PHA may not discourage the family from choosing to live anywhere in the PHA jurisdiction or outside the PHA jurisdiction under portability, unless otherwise expressly authorized by statute, regulation, PIH Notice, or court order;
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• The PHA must inform the family of how portability may affect the family’s assistance through screening, subsidy standards, payment standards, and any other elements of the portability process which may affect the family’s assistance; • The advantages of areas that do not have a high concentration of low-income families; and • For families receiving welfare-to-work vouchers, a description of any local obligations of a welfare-to-work family and an explanation that failure to meet the obligations is grounds for denial of admission or termination of assistance.

Briefing Packet [24 CFR 982.301(b)]
Documents and information provided in the briefing packet must include the following:
• The term of the voucher, voucher suspensions, and the PHA’s policies on any extensions of the term. If the PHA allows extensions, the packet must explain how the family can request an extension.
• A description of the method used to calculate the housing assistance payment for a family, including how the PHA determines the payment standard for a family, how the PHA determines total tenant payment for a family, and information on the payment standard and utility allowance schedule.
• An explanation of how the PHA determines the maximum allowable rent for an assisted unit.
• Where the family may lease a unit and an explanation of how portability works, including information on how portability may affect the family’s assistance through screening, subsidy standards, payment standards, and any other elements of the portability process that may affect the family’s assistance;
• The HUD-required tenancy addendum, which must be included in the lease. • The form the family must use to request approval of tenancy, and a description of the procedure for requesting approval for a tenancy.
• A statement of the PHA policy on providing information about families to prospective owners.
• The PHA subsidy standards including when and how exceptions are made. • Materials (e.g., brochures) on how to select a unit and any additional information on selecting a unit that HUD provides.
• Information on federal, state and local equal opportunity laws and a copy of the housing discrimination complaint form.
• A list of landlords known to the PHA who may be willing to lease a unit to the family or other resources (e.g., newspapers, organizations, online search tools) known to the PHA that may assist the family in locating a unit. PHAs must ensure that the list of landlords or other resources covers areas outside of poverty or minority concentration. © Copyright 2021 Nan McKay & Associates, Inc.

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• Notice that if the family includes a person with disabilities, the family may request a list of available accessible units known to the PHA.
• The family obligations under the program, including any obligations of a welfare-to-work family.
• The grounds on which the PHA may terminate assistance for a participant family because of family action or failure to act.
• PHA informal hearing procedures including when the PHA is required to offer a participant family the opportunity for an informal hearing, and how to request the hearing. • An explanation of the advantages of moving to an area that does not have a high concentration of low-income families.

If the PHA is located in a metropolitan area, the following additional information must be included in the briefing packet in order to receive full points under SEMAP Indicator 7, Expanding Housing Opportunities [24 CFR 985.3(g)].
• Maps showing areas with housing opportunities outside areas of poverty or minority concentration, both within its jurisdiction and its neighboring jurisdiction. • Information about the characteristics of these areas including job opportunities, schools, transportation and other services.
• An explanation of how portability works, including a list of portability contact persons for neighboring PHAs including names, addresses, and telephone numbers.

Additional Items to be Included in the Briefing Packet
In addition to items required by the regulations, PHAs may wish to include supplemental materials to help explain the program to both participants and owners [HCV GB p. 8-7, Notice PIH 2017-12].

PHA Policy
The PHA will provide the following additional materials in the briefing packet:

The HUD pamphlet on lead-based paint entitled Protect Your Family from Lead in Your Home
Information on how to fill out and file a housing discrimination complaint form The publication Things You Should Know (HUD-1140-OIG) that explains the types of actions a family must avoid and the penalties for program abuse The form HUD-5380 domestic violence certification form and the form HUD5382 notice of occupancy rights, which contains information on VAWA protections for victims of domestic violence, dating violence, sexual assault, and stalking
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“Is Fraud Worth It?” (form HUD-1141-OIG), which explains the types of actions a family must avoid and the penalties for program abuse
“What You Should Know about EIV,” a guide to the Enterprise Income Verification (EIV) system published by HUD as an attachment to Notice PIH 2017- 12 Proof of effort search record.

Packet for owners with an HQS checklist.

Eligibility requirements for medical expense deduction.

Family Self-Sufficiency Program information.

Information regarding risks associated with lead-based paint.

Reminder to family that it is mandatory that the household report any changes in Household Income (for all household members 18 and older) in writing within 10 business days. This reminder shall detail information about income discrepancies and the Income Verification system used by the PHA. 5-I.C. FAMILY OBLIGATIONS
Obligations of the family are described in the housing choice voucher (HCV) regulations and on the voucher itself. These obligations include responsibilities the family is required to fulfill, as well as prohibited actions. The PHA must inform families of these obligations during the oral briefing, and the same information must be included in the briefing packet. When the family’s unit is approved and the HAP contract is executed, the family must meet those obligations in order to continue participating in the program. Violation of any family obligation may result in termination of assistance, as described in Chapter 12.

Time Frames for Reporting Changes Required by Family Obligations PHA Policy
Unless otherwise noted below, when family obligations require the family to respond to a request or notify the PHA of a change, notifying the PHA of the request or change within 10 business days is considered prompt notice.

When a family is required to provide notice to the PHA, the notice must be in writing. © Copyright 2021 Nan McKay & Associates, Inc.

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Family Obligations [24 CFR 982.551]
The family obligations of the voucher are listed as follows:

1. The family must supply any information that the PHA or HUD determines to be necessary in the administration of the program, including submission of required evidence of citizenship or eligible immigration status. “Information” includes any requested certification, release or other documentation.

2. The family must supply any information requested by the PHA or HUD for use in a regularly scheduled reexamination or interim reexamination of family income and composition in accordance with HUD requirements.

3. The family must disclose and verify social security numbers and sign and submit consent forms for obtaining information.

4. Any information supplied by the family must be true and complete.

5. The family is responsible for any Housing Quality Standards (HQS) breach caused by the family as described in 24 CFR Section 982.404(b).

PHA Policy
The tenant is responsible to notify the owner in writing of any/all items needing repair in the apartment or other issues related to damage or inoperability in the apartment, whether they are tenant caused or the result of normal wear and tear.

6. The family must allow the PHA to inspect the unit at reasonable times and after reasonable notice, as described in Chapter 8 of this plan.

7. The family must not commit any serious violation of the lease.

PHA Policy
The PHA will determine if a family has committed serious violations of the lease based on available evidence, including but not limited to, a court-ordered eviction, or an owner’s notice to evict, police reports, and affidavits from the owner, neighbors, or other credible parties with direct knowledge.

Serious lease violations will include, but not be limited to, nonpayment of rent, disturbance of neighbors, destruction of property, or living or housekeeping habits that cause damage to the unit or premises, pose a safety hazard, or are criminal activities.

Generally, the criterion to be used will be whether or not the reason for the eviction was the fault of the tenant or guests. Any incidents of, or criminal activity related to, domestic violence, dating violence, sexual assault, or stalking will not be construed as serious lease violations by the victim [42 U.S.C. § 14043e-11(b)(3)(A); 24 CFR

5.2005(c)(1)].

8. The family must notify the PHA and the owner before moving out of the unit or terminating the lease.
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PHA Policy
The family must comply with lease requirements regarding written notice to the owner.

The family must provide written notice to the PHA at the same time the owner is notified, but no less than 30 days. The family must request PHA approval to move and comply with PHA’s transfer and portability procedures. The family must submit the request to move in writing at least sixty (60) days before the requested lease termination/move out date.

9. The family must promptly give the PHA a copy of any owner eviction notice within 10 business days.

PHA Policy
The family must promptly provide to the PHA a copy of any rent increase notice, notice of lease violation, or other official notice served on the family by the landlord, including notices of rent increase and notices of lease violation.

The family must promptly provide to PHA a copy of any notice served on the family by the landlord,

10. The family must use the assisted unit for residence by the family. The unit must be the family’s only residence.

The composition of the assisted family residing in the unit must be approved by the PHA.

The family must promptly notify the PHA in writing of the birth, adoption, or court-awarded custody of a child. The family must request PHA approval to add any other family member as an occupant of the unit in advance. A criminal background will be conducted prior to adding any member to the household if the member is age 18 or older. No other person(s) (i.e., nobody but members of the assisted family) may reside in the unit (except for a foster child or live-in aide as provided below).

11. PHA Policy
The request to add a family member must be submitted in writing and approved prior to the person moving into the unit. The PHA will determine eligibility of the new member in accordance with the policies in Chapter 3.

12. The family must promptly notify the PHA in writing if any family member no longer lives in the unit.

PHA Policy
The notification of a change in household size must be submitted in writing and may require PHA approval prior to the person being removed from the household.

13. If the PHA has given approval, a foster child or a live-in aide may reside in the unit. The PHA has the discretion to adopt reasonable policies concerning residency by a foster child or a live-in aide, and to define when PHA consent may be given or denied. For policies related to © Copyright 2021 Nan McKay & Associates, Inc.

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the request and approval/disapproval of foster children, foster adults, and live-in aides, see Chapter 3 (Sections I.K and I.M), and Chapter 11 (Section II.B).

14. Members of the household may engage in legal profitmaking activities in the unit, but only if such activities are incidental to primary use of the unit for residence by members of the family.

15. The family must not sublease or let the unit.

PHA Policy
Subleasing includes receiving payment to cover rent and utility costs by a person living in the unit who is not listed as a household member.

16. The family must not assign the lease or transfer the unit.

17. The family must supply any information or certification requested by the PHA to verify that the family is living in the unit, or related to family absence from the unit, including any PHArequested information or certification for the purposes of family absences. The family must cooperate with the PHA for this purpose. The family must promptly notify the PHA of absence from the unit.

PHA Policy
Notice is required under this provision when any family member will be absent from the unit for an extended period. An extended period is defined as any period greater than 30 calendar days. Written notice must be provided to the PHA prior to the start of the extended absence.

18. The family must not own or have any interest in the unit (other than in a cooperative and owners of a manufactured home leasing a manufactured home space).

19. Family members must not commit fraud, bribery, or any other corrupt or criminal act in connection with the program (See Chapter 14, Program Integrity for additional information).

20. Family members must not engage in drug-related criminal activity or violent criminal activity or other criminal activity that threatens the health, safety or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises (See Chapter 12 for HUD and PHA policies related to drug-related and violent criminal activity).

21. Members of the household must not engage in abuse of alcohol in a way that threatens the health, safety or right to peaceful enjoyment of the other residents and persons residing in the immediate vicinity of the premises (See Chapter 12 for a discussion of HUD and PHA policies related to alcohol abuse).

22. An assisted family or member of the family must not receive HCV program assistance while receiving another housing subsidy, for the same unit or a different unit under any other federal, state or local housing assistance program.
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23. A family must not receive HCV program assistance while residing in a unit owned by a parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving rental of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. [Form HUD-52646, Voucher]

24. The family must immediately notify the PHA in writing of any increases in family income or assets.

25. The family must immediately notify the PHA in writing when a full-time adult student is no longer enrolled and/or attending school full-time.

26. The family must pay utility bills and provide and maintain any appliances that the owner is not required to provide under the lease [Form HUD-52646, Voucher].

27. The family (including each family member) must not damage the unit or premises (other than damage from ordinary wear and tear) or permit any guest to damage the unit or premises.

28. The family agrees not to pay the owner/landlord any additional compensation (either monetary or other) other than that which is approved by the lease or approved by the PHA.

29. The family must not engage in or threaten abusive or violent behavior towards any PHA employee or representative.
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PART II: SUBSIDY STANDARDS AND VOUCHER ISSUANCE
5-II.A. OVERVIEW
The PHA must establish subsidy standards that determine the number of bedrooms needed for families of different sizes and compositions. This part presents the policies that will be used to determine the family unit size (also known as the voucher size) a particular family should receive, and the policies that govern making exceptions to those standards. The PHA must also establish policies related to the issuance of the voucher, to the voucher term, and to any extensions of the voucher term.
5-II.B. DETERMINING FAMILY UNIT (VOUCHER) SIZE [24 CFR 982.402] For each family, the PHA determines the appropriate number of bedrooms under the PHA subsidy standards and enters the family unit size on the voucher that is issued to the family.

The family unit size does not dictate the size of unit the family must actually lease, nor does it determine who within a household will share a bedroom/sleeping room.

The following requirements apply when the PHA determines family unit size:
• The subsidy standards must provide for the smallest number of bedrooms needed to house a family without overcrowding.
• The subsidy standards must be consistent with space requirements under the housing quality standards.
• The subsidy standards must be applied consistently for all families of like size and composition.
• A child who is temporarily away from the home because of placement in foster care is considered a member of the family in determining the family unit size.

PHA Policy
If the child is or is expected to be absent from the assisted unit for more than 90 consecutive days, the voucher size will be reduced in accordance with the PHA’s subsidy standards. Temporarily away is defined as any period less than 90 calendar days.

Written notice must be provided to the PHA within 10 days of the child’s removal. • A family that consists of a pregnant woman (with no other persons) must be treated as a two-person family.
• Any live-in aide (approved by the PHA to reside in the unit to care for a family member who is disabled or is at least 50 years of age) must be counted in determining the family unit size;
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• Unless a live-in-aide resides with a family, the family unit size for any family consisting of a single person must be either a zero- or one-bedroom unit, as determined under the PHA subsidy standards. An approved live-in aide will not be given a designated bedroom unless necessary by reasonable accommodation.

PHA Policy
The PHA will assign one bedroom for each two persons within the household, except in the following circumstances:

Single person families will be allocated a zero or 1-bedroom Space will not be provided for any family member who is absent from the home in excess of 90 consecutive days per calendar year.

The number of bedrooms on the voucher cannot be more than the number of persons in the household.

At admission, the PHA will reference the following chart in determining the appropriate voucher size for a family:

Voucher Size Persons in Household
(Minimum – Maximum)
0 Bedroom 1-2
1 Bedroom 1-3
2 Bedrooms 3-5
3 Bedrooms 5-7
4 Bedrooms 7-9
5 Bedrooms 9-11
PHA Policy
If a family reports a reduction in family size which would result in there being less than one person per bedroom, the household will be given notice that they have 12 months to search for a new unit and referred to opportunities available in other Santa Monica affordable housing programs, such as the Affordable Housing Production Program. At the end of the 12 months, the subsidy size will be reduced to no more than one bedroom per person unless necessary by reasonable accommodation. Proof of effort must be provided at annual recertification.
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5-II.C. EXCEPTIONS TO SUBSIDY STANDARDS
In determining family unit size for a particular family, the PHA may grant an exception to its established subsidy standards if the PHA determines that the exception is justified by the age, sex, health, handicap, or relationship of family members or other personal circumstances [24 CFR 982.402(b)(8)]. Reasons may include, but are not limited to:
• A need for an additional bedroom for medical equipment • A need for a separate bedroom for reasons related to a family member’s disability, medical or health condition
For a single person who is not elderly, disabled, or a remaining family member, an exception cannot override the regulatory limit of a zero or one bedroom [24 CFR 982.402(b)(8)].

PHA Policy
The PHA will consider granting an exception for any of the reasons specified in the regulation: the age, sex, health, handicap, or relationship of family members or other personal circumstances.

The family must request any exception to the subsidy standards in writing. The request must explain the need or justification for a larger family unit size, and must include PHA required documentation. Requests based on health-related reasons must be verified by a knowledgeable professional source (e.g., doctor or health professional), unless the disability and the disability–related request for accommodation is readily apparent or otherwise known. The family’s continued need for an additional bedroom due to special medical equipment must be re-verified at annual reexamination.

After a request for an exception is presented, the PHA will respond in writing, acknowledging receipt of the request, within 10 business days.

Based on the verified need for the exception or the absence thereof, the PHA will render its decision within a reasonable period of time. If a participant family’s request is denied, the notice will inform the family of their right to request an informal review. 5-II.D. VOUCHER ISSUANCE [24 CFR 982.302]
When a family is selected from the waiting list (or as a special admission as described in Chapter 4), or when a participant family wants to move to another unit, the PHA issues a Housing Choice Voucher, form HUD-52646. This chapter deals only with voucher issuance for applicants. For voucher issuance associated with moves of program participants, please refer to Chapter 10.

The voucher is the family’s authorization to search for housing. It specifies the unit size for which the family qualifies and includes both the date of voucher issuance and date of expiration. It contains a brief description of how the program works and explains the family © Copyright 2021 Nan McKay & Associates, Inc.

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obligations under the program. The voucher is evidence that the PHA has determined the family to be eligible for the program, and that the PHA expects to have money available to subsidize the family if the family finds an approvable unit. However, the PHA does not have any liability to any party by the issuance of the voucher, and the voucher does not give the family any right to participate in the PHA’s housing choice voucher program [Voucher, form HUD52646] A voucher can be issued to an applicant family only after the PHA has determined that the family is eligible for the program based on verification of information received within the 60 days prior to issuance [24 CFR 982.201(e)] and after the family has attended an oral briefing [HCV 8-1].

PHA Policy
Vouchers will be issued to eligible applicants immediately following the mandatory briefing.

The PHA should have sufficient funds to house an applicant before issuing a voucher. If funds are insufficient to house the family at the top of the waiting list, the PHA must wait until it has adequate funds before it calls another family from the list [HCV GB p. 8-10].

PHA Policy
Prior to issuing any vouchers, the PHA will determine whether it has sufficient funding in accordance with the policies in Part VIII of Chapter 16.

If the PHA determines that there is insufficient funding after a voucher has been issued, the PHA may rescind the voucher and place the affected family back on the waiting list. 5-II.E. VOUCHER TERM, AND EXTENSIONS
Voucher Term [24 CFR 982.303]
The initial term of a voucher must be at least 60 calendar days. The initial term must be stated on the voucher [24 CFR 982.303(a)].

PHA Policy
The initial voucher term will be 180 calendar days.

The family must submit a Request for Tenancy Approval and proposed lease within the 180-day period unless the PHA grants an extension.
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Extensions of Voucher Term [24 CFR 982.303(b)]
The PHA has the authority to grant extensions of search time, to specify the length of an extension, and to determine the circumstances under which extensions will be granted. There is no limit on the number of extensions that the PHA can approve. Discretionary policies related to extension and expiration of search time must be described in the PHA’s administrative plan [24 CFR 982.54].

PHAs must approve additional search time if needed as a reasonable accommodation to make the program accessible to and usable by a person with disabilities. The extension period must be reasonable for the purpose.

The family must be notified in writing of the PHA’s decision to approve or deny an extension.

The PHA’s decision to deny a request for an extension of the voucher term is not subject to informal review [24 CFR 982.554(c)(4)].

PHA Policy
The PHA may approve three 30-day extensions upon written request from the family.

The PHA will approve additional extensions only in the following circumstances:

It is necessary as a reasonable accommodation for a person with disabilities.

It is necessary due to reasons beyond the family’s control, as determined by the PHA. Following is a list of extenuating circumstances that the PHA may consider in making its decision. The presence of these circumstances does not guarantee that an extension will be granted:

Serious illness or death in the family
Other family emergency
Obstacles due to employment
Whether the family has already submitted requests for tenancy approval that were not approved by the PHA
Whether family size or other special circumstances make it difficult to find a suitable unit
Any request for an additional extension must include the reason(s) an additional extension is necessary. The PHA will require the family to provide documentation to support the request including a proof of effort form.

All requests for extensions to the voucher term must be made in writing and submitted to the PHA prior to the expiration date of the voucher. © Copyright 2021 Nan McKay & Associates, Inc.

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The PHA will decide whether to approve or deny an extension request within 10 business days of the date the request is received and will immediately provide the family written notice of its decision.

Suspensions of Voucher Term [24 CFR 982.303(c)]
The PHA must provide for suspension of the initial or any extended term of the voucher from the date the family submits a request for PHA approval of the tenancy until the date the PHA notifies the family in writing whether the request has been approved or denied.

PHA Policy
The term is suspended (tolled) while a Request for Tenancy Approval (RTA) is pending for up to 30 days. In the event HQS deficiencies must be cured, the term may be suspended for up to 60 days).

Expiration of Voucher Term
Once a family’s housing choice voucher term (including any extensions) expires, the family is no longer eligible to search for housing under the program. If the family still wishes to receive assistance, the PHA may require that the family reapply, or may place the family on the waiting list with a new application date but without requiring reapplication. Such a family does not become ineligible for the program on the grounds that it was unable to locate a unit before the voucher expired [HCV GB p. 8-13].

PHA Policy
If an applicant family’s voucher term or extension expires before the PHA has approved a tenancy, the PHA will require the family to reapply for assistance. Within 10 business days after the expiration of the voucher term or any extension, the PHA will notify the family in writing that the voucher term has expired and that the family must reapply when the waiting list is open in order to be placed on the waiting list. © Copyright 2021 Nan McKay & Associates, Inc.

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CHAPTER 6 : INCOME AND SUBSIDY DETERMINATIONS
[24 CFR Part 5, Subparts E and F; 24 CFR 982]

INTRODUCTION
A family’s income determines eligibility for assistance and is also used to calculate the family’s payment and the PHA’s subsidy. The PHA will use the policies and methods described in this chapter to ensure that only eligible families receive assistance and that no family pays more or less than its obligation under the regulations. This chapter describes HUD regulations and PHA policies related to these topics in three parts as follows:
• Part I: Annual Income. HUD regulations specify the sources of income to include and exclude to arrive at a family’s annual income. These requirements and PHA policies for calculating annual income are found in Part I.
• Part II: Adjusted Income. Once annual income has been established HUD regulations require the PHA to subtract from annual income any of five mandatory deductions for which a family qualifies. These requirements and PHA policies for calculating adjusted income are found in Part II.
• Part III: Calculating Family Share and PHA Subsidy. This part describes the statutory formula for calculating total tenant payment (TTP), the use of utility allowances, and the methodology for determining PHA subsidy and required family payment. © Copyright 2021 Nan McKay & Associates, Inc.

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PART I: ANNUAL INCOME
6-I.A. OVERVIEW
The general regulatory definition of annual income shown below is from 24 CFR 5.609.

5.609 Annual income.
(a) Annual income means all amounts, monetary or not, which:
(1) Go to, or on behalf of, the family head or spouse (even if temporarily absent) or to any other family member; or
(2) Are anticipated to be received from a source outside the family during the 12-month period following admission or annual reexamination effective date; and (3) Which are not specifically excluded in paragraph [5.609(c)]. (4) Annual income also means amounts derived (during the 12-month period) from assets to which any member of the family has access.

In addition to this general definition, HUD regulations establish policies for treating specific types of income and assets. The full texts of those portions of the regulations are provided in exhibits at the end of this chapter as follows:
• Annual Income Inclusions (Exhibit 6-1)
• Annual Income Exclusions (Exhibit 6-2)
• Treatment of Family Assets (Exhibit 6-3)
• Earned Income Disallowance for Persons with Disabilities (Exhibit 6-4) • The Effect of Welfare Benefit Reduction (Exhibit 6-5) Sections 6-I.B and 6-I.C discuss general requirements and methods for calculating annual income. The rest of this section describes how each source of income is treated for the purposes of determining annual income. HUD regulations present income inclusions and exclusions separately [24 CFR 5.609(b) and 24 CFR 5.609(c)]. In this plan, however, the discussions of income inclusions and exclusions are integrated by topic (e.g., all policies affecting earned income are discussed together in section 6-I.D). Verification requirements for annual income are discussed in Chapter 7.
6-I.B. HOUSEHOLD COMPOSITION AND INCOME
Income received by all family members must be counted unless specifically excluded by the regulations. It is the responsibility of the head of household to report changes in family © Copyright 2021 Nan McKay & Associates, Inc.

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composition. The rules on which sources of income are counted vary somewhat by family member. The chart below summarizes how family composition affects income determinations.

Summary of Income Included and Excluded by Person
Live-in aides Income from all sources is excluded [24 CFR 5.609(c)(5)].

Foster child or foster adult Income from all sources is excluded [24 CFR 5.609(c)(2)].

Head, spouse, or cohead
Other adult family members
All sources of income not specifically excluded by the
regulations are included.

Children under 18 years of age Employment income is excluded [24 CFR 5.609(c)(1)].

All other sources of income, except those specifically
excluded by the regulations, are included.

Full-time students 18 years of
age or older (not head,
spouse, or cohead)
Employment income above $480/year is excluded [24 CFR

5.609(c)(11)].

All other sources of income, except those specifically
excluded by the regulations, are included.

Temporarily Absent Family Members
The income of family members approved to live in the unit will be counted, even if the family member is temporarily absent from the unit [HCV GB, p. 5-18].

PHA Policy
Generally, an individual who is or is expected to be absent from the assisted unit for 90 consecutive days or less is considered temporarily absent and continues to be considered a family member. An individual who is or is expected to be absent from the assisted unit for more than 90 consecutive days is considered permanently absent and no longer a family member. Exceptions to this general policy are discussed below.

It is the responsibility of the head of household to report changes in family composition.

Absent Students
PHA Policy
When someone who has been considered a family member attends school away from home and resides with the family during school recess, the person will not be © Copyright 2021 Nan McKay & Associates, Inc.

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considered a family member as long as the person’s stay meets the policy regarding guests as set forth in Chapter 3-I.J.

Absences Due to Placement in Foster Care
Children temporarily absent from the home as a result of placement in foster care are considered members of the family [24 CFR 5.403].

PHA Policy
If a child has been placed in foster care, the head of household will notify the PHA in writing and provide written verification from the appropriate agency whether and when the child is expected to return to the home. If the agency confirms that the child has been permanently removed from the home, the child will not be counted as a family member.

Absent Head, Spouse, or Cohead
PHA Policy
An employed head, spouse, or cohead absent from the unit more than 90 consecutive days due to employment will not continue to be considered a family member, with the exception of military personnel as required by the Service Members Civil Relief Act (SCRA) [50 U.S.C. § 101 et seq. SCRA § 508 (b)].

Family Members Permanently Confined for Medical Reasons If a family member is confined to a nursing home or hospital on a permanent basis, that person is no longer considered a family member and the income of that person is not counted [HCV GB, p. 5-22].

PHA Policy
The PHA will request verification from a responsible medical professional and will use this determination. If the verification indicates that the family member will be permanently confined to a nursing home, the family will be considered permanently absent. If the responsible medical professional cannot provide a determination, the person generally will be considered temporarily absent. At the family’s request, this may be re-evaluated after 3 months. The family may present evidence that the family member is confined on a permanent basis and request that the person not be considered a family member.
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When an individual who has been counted as a family member is determined permanently absent, the family is eligible for the medical expense deduction only if the remaining head, spouse, or cohead qualifies as an elderly person or a person with disabilities.

Joint Custody of Dependents
PHA Policy
Dependents that are subject to a joint custody arrangement will be considered a member of the family, if they live with the applicant or participant family 50 percent or more of the time.

When more than one applicant or participant family is claiming the same dependents as family members, the family with primary custody at the time of the initial examination or reexamination will be able to claim the dependents and receive the dependent allowance/deduction. If there is a dispute about which family should claim them, the PHA will make the determination based on available documents such as court orders, school records, or an IRS return showing which family has claimed the child for income tax purposes, or school/childcare records.

Caretakers for a Child
PHA Policy
The approval of a caretaker is at the owner and PHA’s discretion and subject to the owner and PHA’s screening criteria. If neither a parent nor a designated guardian remains in a household receiving HCV assistance, the PHA will take the following actions.
(1) If a responsible agency has determined that another adult is to be brought into the assisted unit to care for a child for an indefinite period, the designated caretaker will not be considered a family member until a determination of custody or legal guardianship is made.
(2) If a caretaker has assumed responsibility for a child without the involvement of a responsible agency or formal assignment of custody or legal guardianship, the caretaker will be treated as a visitor for 90 days. After the 90 days has elapsed, the caretaker will be considered a family member unless information is provided that would confirm that the caretaker’s role is temporary. In such cases the PHA will extend the caretaker’s status as an eligible visitor and review the status in 30 days. (3) At any time that custody or guardianship legally has been awarded to a caretaker, the housing choice voucher will be transferred to the caretaker and the income of © Copyright 2021 Nan McKay & Associates, Inc.

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that caretaker should be counted. All other eligibility criteria apply to the caretaker as well.
(4) During any period that a caretaker is considered a visitor, the income of the caretaker is not counted in annual income and the caretaker does not qualify the family for any deductions from income.
6-I.C. ANTICIPATING ANNUAL INCOME
The PHA is required to count all income “anticipated to be received from a source outside the family during the 12-month period following admission or annual reexamination effective date” [24 CFR 5.609(a)(2)]. Policies related to anticipating annual income are provided below.

Basis of Annual Income Projection
The PHA generally will use current circumstances to determine anticipated income for the coming 12-month period. HUD authorizes the PHA to use other than current circumstances to anticipate income when:
• An imminent change in circumstances is expected [HCV GB, p. 5-17] • It is not feasible to anticipate a level of income over a 12-month period (e.g., seasonal or cyclic income) [24 CFR 5.609(d)]
• The PHA believes that past income is the best available indicator of expected future income [24 CFR 5.609(d)]
PHAs are required to use HUD’s Enterprise Income Verification (EIV) system in its entirety as a third-party source to verify employment and income information, reduce fraud and administrative subsidy payment errors in accordance with HUD administrative guidance [24 CFR

5.233(a)(2)].

HUD allows PHAs to use tenant-provided documents (pay stubs) to project income once EIV data has been received in such cases where the family does not dispute the EIV employer data and where the PHA does not determine it is necessary to obtain additional third-party data.

PHA Policy
When EIV is obtained and the family does not dispute the EIV employer data, the PHA will use current tenant-provided documents to project annual income. When the tenant-provided documents are pay stubs, the PHA will make every effort to obtain 3 current and consecutive pay stubs dated within the last 60 days.

The PHA will obtain written and/or oral third-party verification in accordance with the verification requirements and policy in Chapter 7 in the following cases:
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If EIV or other UIV data is not available,
If the family disputes the accuracy of the EIV employer data, and/or If the PHA determines additional information is needed.

In such cases, the PHA will review and analyze current data to anticipate annual income.

In all cases, the family file will be documented with a clear record of the reason for the decision, and a clear audit trail will be left as to how the PHA annualized projected income.

When the PHA cannot readily anticipate income based upon current circumstances (e.g., in the case of seasonal employment, unstable working hours, or suspected fraud), the PHA will review and analyze historical data for patterns of employment, paid benefits, and receipt of other income and use the results of this analysis to establish annual income.

Any time current circumstances are not used to project annual income, a clear rationale for the decision will be documented in the file. In all such cases the family may present information and documentation to the PHA to show why the historic pattern does not represent the family’s anticipated income.

Known Changes in Income
If the PHA verifies an upcoming increase or decrease in income, annual income will be calculated by applying each income amount to the appropriate part of the 12-month period.

Example: An employer reports that a full-time employee who has been receiving $8/hour will begin to receive $8.25/hour in the eighth week after the effective date of the reexamination. In such a case the PHA would calculate annual income as follows:
($8/hour × 40 hours × 7 weeks) + ($8.25 × 40 hours × 45 weeks).

The family may present information that demonstrates that implementing a change before its effective date would create a hardship for the family. In such cases the PHA will calculate annual income using current circumstances and then require an interim reexamination when the change actually occurs. This requirement will be imposed even if the PHA’s policy on reexaminations does not require interim reexaminations for other types of changes.

When tenant-provided third-party documents are used to anticipate annual income, they will be dated within the last 60 days of the reexamination interview date. © Copyright 2021 Nan McKay & Associates, Inc.

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Projecting Income
In HUD’s EIV webcast of January 2008, HUD made clear that PHAs are not to use EIV quarterly wages to project annual income.
6-I.D. EARNED INCOME
Types of Earned Income Included in Annual Income
Wages and Related Compensation
The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services is included in annual income [24 CFR 5.609(b)(1)].

PHA Policy
For persons who regularly receive bonuses or commissions, the PHA will verify and then average amounts received for the two years preceding admission or reexamination. If only a one-year history is available, the PHA will use the prior year amounts. In either case the family may provide, and the PHA will consider, a credible justification for not using this history to anticipate future bonuses or commissions. If a new employee has not yet received any bonuses or commissions, the PHA will count only the amount estimated by the employer. The file will be documented appropriately.

Some Types of Military Pay
All regular pay, special pay and allowances of a member of the Armed Forces are counted [24 CFR 5.609(b)(8)] except for the special pay to a family member serving in the Armed Forces who is exposed to hostile fire [24 CFR 5.609(c)(7)].

Types of Earned Income Not Counted in Annual Income
Temporary, Nonrecurring, or Sporadic Income [24 CFR 5.609(c)(9)] This type of income (including gifts) is not included in annual income. Sporadic income includes temporary payments from the U.S. Census Bureau for employment lasting no longer than 180 days [Notice PIH 2009-19]
PHA Policy
Temporary income is income that is received for a period of no more than 60 days in any 12-month period and cannot be reliably anticipated to reoccur. For example, the earned income of an individual who works one or more temporary positions which are not anticipated to exceed 60 cumulative days in any 12-month period, is temporary © Copyright 2021 Nan McKay & Associates, Inc.

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income. This does not include an individual whose field of employment is short term but recurring in nature, in which case the PHA may use previous 12 to a maximum of 36 months of actual earnings to calculate income, if the family member intends to continue in the same type of employment.

Nonrecurring income is income that is received one time only and is not anticipated to reoccur in any 12-month period. For example, a one-time gift of $100 from a daughter to her elderly mother for her birthday would be considered nonrecurring income.

Sporadic income is income that is not received periodically and cannot be reliably predicted. For example, the income of an individual who works occasionally as a handyman, or a person who gains income from recycling cans, would be considered sporadic if future work could not be anticipated and no historic, stable pattern of income existed. (See “Regular Contributions or Gifts” for definition of regular income.) Children’s Earnings
Employment income earned by children (including foster children) under the age of 18 years is not included in annual income [24 CFR 5.609(c)(1)]. (See Eligibility chapter for a definition of foster children.)
PHA Policy
If a child in the household turns 18 and is employed, or becomes employed, it is the responsibility of the head of household to report that change to the PHA within 10 days (of the birthdate or the hire date, as applicable).

Certain Earned Income of Full-Time Students
Earnings in excess of $480 for each full-time student 18 years old or older (except for the head, spouse, or cohead) are not counted [24 CFR 5.609(c)(11)]. To be considered “full-time,” a student must be considered “full-time” by an educational institution with a degree or certificate program [HCV GB, p. 5-29].

Income of a Live-in Aide
Income earned by a live-in aide, employed by Section 8 recipients, as defined in [24 CFR 5.403], is not included in annual income [24 CFR 5.609(c)(5)]. (See Eligibility chapter for a full discussion of live-in aides.)
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Income Earned under Certain Federal Programs
Income from some federal programs is specifically excluded from consideration as income [24 CFR 5.609(c)(17)], including:
• Payments to volunteers under the Domestic Volunteer Services Act of 1973 (42 U.S.C. 5044(g), 5058)
• Awards under the federal work-study program (20 U.S.C. 1087uu) • Payments received from programs funded under Title V of the Older Americans Act of 1985 (42 U.S.C. 3056(f))
• Allowances, earnings, and payments to AmeriCorps participants under the National and Community Service Act of 1990 (42 U.S.C. 12637(d))
• Allowances, earnings, and payments to participants in programs funded under the Workforce Investment Act of 1998 (29 U.S.C. 2931)
Resident Service Stipend
Amounts received under a resident service stipend are not included in annual income. A resident service stipend is a modest amount (not to exceed $200 per individual per month) received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development. Such services may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, resident initiatives coordination, and serving as a member of the PHA’s governing board. No resident may receive more than one such stipend during the same period of time [24 CFR 5.600(c)(8)(iv)].

State and Local Employment Training Programs
Incremental earnings and benefits to any family member resulting from participation in qualifying state or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff are excluded from annual income. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives and are excluded only for the period during which the family member participates in the training program [24 CFR 5.609(c)(8)(v)].

PHA Policy
The PHA defines training program as “a learning process with goals and objectives, generally having a variety of components, and taking place in a series of sessions over a period of time. It is designed to lead to a higher level of proficiency, and it enhances the individual’s ability to obtain employment. It may have performance standards to © Copyright 2021 Nan McKay & Associates, Inc.

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measure proficiency. Training may include but is not limited to: (1) classroom training in a specific occupational skill, (2) on-the-job training with wages subsidized by the program, or (3) basic education” [expired Notice PIH 98-2, p. 3].

The PHA defines incremental earnings and benefits as the difference between: (1) the total amount of welfare assistance and earnings of a family member prior to enrollment in a training program, and (2) the total amount of welfare assistance and earnings of the family member after enrollment in the program [expired Notice PIH 98-2, pp. 3–4].

In calculating the incremental difference, the PHA will use as the pre-enrollment income the total annualized amount of the family member’s welfare assistance and earnings reported on the family’s most recently completed HUD-50058.

End of participation in a training program must be reported in accordance with the PHA's interim reporting requirements.

HUD-Funded Training Programs
Amounts received under training programs funded in whole or in part by HUD [24 CFR

5.609(c)(8)(i)] are excluded from annual income. Eligible sources of funding for the training include operating subsidy, Section 8 administrative fees, and modernization, Community Development Block Grant (CDBG), HOME program, and other grant funds received from HUD.

PHA Policy
To qualify as a training program, the program must meet the definition of training program provided above for state and local employment training programs.

Earned Income Tax Credit
Earned income tax credit (EITC) refund payments received on or after January 1, 1991 (26 U.S.C. 32(j)), are excluded from annual income [24 CFR 5.609(c)(17)]. Although many families receive the EITC annually when they file taxes, an EITC can also be received throughout the year. The prorated share of the annual EITC is included in the employee’s payroll check.

Earned Income Disallowance
The earned income disallowance for persons with disabilities is discussed in section 6-I.E below. © Copyright 2021 Nan McKay & Associates, Inc.

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6-I.E. EARNED INCOME DISALLOWANCE FOR PERSONS WITH DISABILITIES [24 CFR 5.617; STREAMLINING FINAL RULE (SFR) FEDERAL REGISTER 3/8/16]
The earned income disallowance (EID) encourages people with disabilities to enter the work force by not including the full value of increases in earned income for a period of time. The full text of 24 CFR 5.617 is included as Exhibit 6-4 at the end of this chapter. Eligibility criteria and limitations on the disallowance are summarized below.

Eligibility
This disallowance applies only to individuals in families already participating in the HCV program (not at initial examination). To qualify, the family must experience an increase in annual income that is the result of one of the following events:
• Employment of a family member who is a person with disabilities and who was previously unemployed for one or more years prior to employment. Previously unemployed includes a person who annually has earned not more than the minimum wage applicable to the community multiplied by 500 hours. The applicable minimum wage is the federal minimum wage unless there is a higher state or local minimum wage. • Increased earnings by a family member who is a person with disabilities and whose earnings increase during participation in an economic self-sufficiency or job-training program. A selfsufficiency program includes a program designed to encourage, assist, train, or facilitate the economic independence of HUD-assisted families or to provide work to such families [24 CFR 5.603(b)].
• New employment or increased earnings by a family member who is a person with disabilities and who has received benefits or services under Temporary Assistance for Needy Families (TANF) or any other state program funded under Part A of Title IV of the Social Security Act within the past six months. If the benefits are received in the form of monthly maintenance, there is no minimum amount. If the benefits or services are received in a form other than monthly maintenance, such as one-time payments, wage subsidies, or transportation assistance, the total amount received over the six-month period must be at least $500.

PHA Policy
The PHA will provide EID eligibility criteria during the annual recertification process.

Calculation of the Disallowance
Calculation of the earned income disallowance for an eligible member of a qualified family begins with a comparison of the member’s current income with his or her “baseline income.” The family member’s baseline income is his or her income immediately prior to qualifying for the EID. The family member’s baseline income remains constant throughout the period that he or she is participating in the EID.
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Calculation Method
Initial 12-Month Exclusion
During the initial exclusion period of 12 consecutive months, the full amount (100 percent) of any increase in income attributable to new employment or increased earning is excluded.

PHA Policy
The initial EID exclusion period will begin on the first of the month following the date an eligible member of a qualified family is first employed or first experiences an increase in earning.

Second 12-Month Exclusion
During the second exclusion period of 12 consecutive months, the PHA must exclude at least 50 percent of any increase in income attributable to employment or increase earnings.

PHA Policy
During the second 12-month exclusion period, the PHA will exclude 100 percent of any increase in income attributable to new employment or increased earning.

Lifetime Limitation
The EID has a two-year (24-month) lifetime maximum. The two-year eligibility period begins at the same time that the initial exclusion period begins and ends 24 months later. During the 24- month period, an individual remains eligible for EID even if they begin to receive assistance from a different housing agency, move between public housing and section 8 assistance, or have breaks in assistance.
6-I.F. BUSINESS INCOME [24 CFR 5.609(B)(2)]
Annual income includes “the net income from the operation of a business or profession.

Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight-line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family” [24 CFR 5.609(b)(2)]. © Copyright 2021 Nan McKay & Associates, Inc.

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Business Expenses
Net income is “gross income less business expense” [HCV GB, p. 5-19].

PHA Policy
To determine business expenses that may be deducted from gross income, the PHA will use current applicable Internal Revenue Service (IRS) rules for determining allowable business expenses [see IRS Publication 535], unless a topic is addressed by HUD regulations or guidance as described below.

Business Expansion
HUD regulations do not permit the PHA to deduct from gross income expenses for business expansion.

PHA Policy
Business expansion is defined as any capital expenditures made to add new business activities, to expand current facilities, or to operate the business in additional locations.

For example, purchase of a street sweeper by a construction business for the purpose of adding street cleaning to the services offered by the business would be considered a business expansion. Similarly, the purchase of a property by a hair care business to open at a second location would be considered a business expansion.

Capital Indebtedness
HUD regulations do not permit the PHA to deduct from gross income the amortization of capital indebtedness.

PHA Policy
Capital indebtedness is defined as the principal portion of the payment on a capital asset such as land, buildings, and machinery. This means the PHA will allow as a business expense interest, but not principal, paid on capital indebtedness.

Negative Business Income
If the net income from a business is negative, no business income will be included in annual income; a negative amount will not be used to offset other family income. © Copyright 2021 Nan McKay & Associates, Inc.

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Withdrawal of Cash or Assets from a Business
HUD regulations require the PHA to include in annual income the withdrawal of cash or assets from the operation of a business or profession unless the withdrawal reimburses a family member for cash or assets invested in the business by the family.

PHA Policy
Acceptable investments in a business include cash loans and contributions of assets or equipment. For example, if a member of an assisted family provided an up-front loan of $2,000 to help a business get started, the PHA will not count as income any withdrawals from the business up to the amount of this loan until the loan has been repaid if the loan is documented by parties through an executed loan agreement Investments do not include the value of labor contributed to the business without compensation.

Co-owned Businesses
PHA Policy
If a business is co-owned with someone outside the family, the family must document the share of the business it owns. If the family’s share of the income is lower than its share of ownership, the family must document the reasons for the difference. 6-I.G. ASSETS [24 CFR 5.609(B)(3); 24 CFR 5.603(B)]
Overview
There is no asset limitation for participation in the HCV program. However, HUD requires that the PHA include in annual income the anticipated “interest, dividends, and other net income of any kind from real or personal property” [24 CFR 5.609(b)(3)]. This section discusses how the income from various types of assets is determined. For most types of assets, the PHA must determine the value of the asset in order to compute income from the asset. Therefore, for each asset type, this section discusses:
• How the value of the asset will be determined
• How income from the asset will be calculated
Exhibit 6-1 provides the regulatory requirements for calculating income from assets [24 CFR

5.609(b)(3)], and Exhibit 6-3 provides the regulatory definition of net family assets. This section begins with a discussion of general policies related to assets and then provides HUD rules and PHA policies related to each type of asset.

Optional policies for family self-certification of assets are found in Chapter 7. © Copyright 2021 Nan McKay & Associates, Inc.

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General Policies
Income from Assets
The PHA generally will use current circumstances to determine both the value of an asset and the anticipated income from the asset. As is true for all sources of income, HUD authorizes the PHA to use other than current circumstances to anticipate income when (1) an imminent change in circumstances is expected (2) it is not feasible to anticipate a level of income over 12 months or (3) the PHA believes that past income is the best indicator of anticipated income. For example, if a family member owns real property that typically receives rental income but the property is currently vacant, the PHA can take into consideration past rental income along with the prospects of obtaining a new tenant.

PHA Policy
Anytime current circumstances are not used to determine asset income, a clear rationale for the decision will be documented in the file. In such cases the family may present information and documentation to the PHA to show why the asset income determination does not represent the family’s anticipated asset income.

Valuing Assets
The calculation of asset income sometimes requires the PHA to make a distinction between an asset’s market value and its cash value.
• The market value of an asset is its worth in the market (e.g., the amount a buyer would pay for real estate or the total value of an investment account). • The cash value of an asset is its market value less all reasonable amounts that would be incurred when converting the asset to cash.

PHA Policy
Reasonable costs that would be incurred when disposing of an asset include, but are not limited to, penalties for premature withdrawal, broker and legal fees, and settlement costs incurred in real estate transactions [HCV GB, p. 5-28].

Lump-Sum Receipts
Payments that are received in a single lump sum, such as inheritances, capital gains, lottery winnings, insurance settlements, and proceeds from the sale of property, are generally considered assets, not income. However, such lump-sum receipts are counted as assets only if they are retained by a family in a form recognizable as an asset (e.g., deposited in a savings or checking account) [RHIIP FAQs]. (For a discussion of lump-sum payments that represent the delayed start of a periodic payment, most of which are counted as income, see sections 6-I.H and 6-I.I.)
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Imputing Income from Assets [24 CFR 5.609(b)(3), Notice PIH 2012-29] When net family assets are $5,000 or less, the PHA will include in annual income the actual income anticipated to be derived from the assets. When the family has net family assets in excess of $5,000, the PHA will include in annual income the greater of (1) the actual income derived from the assets or (2) the imputed income. Imputed income from assets is the total cash value of all family assets multiplied by an average passbook savings rate as determined by the PHA.
• Note: The HUD field office no longer provides an interest rate for imputed asset income.

The “safe harbor” is now for the PHA to establish a passbook rate within 0.75 percent of a national average.
• The PHA must review its passbook rate annually to ensure that it remains within 0.75 percent of the national average.

PHA Policy
The PHA initially set the imputed asset passbook rate at the national rate established by the Federal Deposit Insurance Corporation (FDIC).

The PHA will review the passbook rate annually. The rate will not be adjusted unless the current PHA rate is no longer within 0.75 percent of the national rate. If it is no longer within 0.75 percent of the national rate, the passbook rate will be set at the current national rate.

The effective date of changes to the passbook rate will be determined at the time of the review.

Determining Actual Anticipated Income from Assets
It may or may not be necessary for the PHA to use the value of an asset to compute the actual anticipated income from the asset. When the value is required to compute the anticipated income from an asset, the market value of the asset is used. For example, if the asset is a property for which a family receives rental income, the anticipated income is determined by annualizing the actual monthly rental amount received for the property; it is not based on the property’s market value. However, if the asset is a savings account, the anticipated income is determined by multiplying the market value of the account by the interest rate on the account.

Withdrawal of Cash or Liquidation of Investments
Any withdrawal of cash or assets from an investment will be included in income except to the extent that the withdrawal reimburses amounts invested by the family. For example, when a © Copyright 2021 Nan McKay & Associates, Inc.

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family member retires, the amount received by the family from a retirement investment plan is not counted as income until the family has received payments equal to the amount the family member deposited into the retirement investment plan.

Jointly Owned Assets
The regulation at 24 CFR 5.609(a)(4) specifies that annual income includes “amounts derived (during the 12-month period) from assets to which any member of the family has access.” PHA Policy
If an asset is owned by more than one person and any family member has unrestricted access to the asset, the PHA will count the full value of the asset. A family member has unrestricted access to an asset when he or she can legally dispose of the asset without the consent of any of the other owners.

If an asset is owned by more than one person, including a family member, but the family member does not have unrestricted access to the asset, the PHA will prorate the asset according to the percentage of ownership. If no percentage is specified or provided for by state or local law, the PHA will prorate the asset evenly among all owners.

Assets Disposed of for Less than Fair Market Value [24 CFR 5.603(b)] HUD regulations require the PHA to count as a current asset any business or family asset that was disposed of for less than fair market value during the two years prior to the effective date of the examination/reexamination, except as noted below.

Minimum Threshold
The HCV Guidebook permits the PHA to set a threshold below which assets disposed of for less than fair market value will not be counted [HCV GB, p. 5-27].

PHA Policy
The PHA will not include the value of assets disposed of for less than fair market value unless the cumulative fair market value of all assets disposed of during the past two years exceeds the gross amount received for the assets by more than $1,000.

When the two-year period expires, the income assigned to the disposed asset(s) also expires. If the two-year period ends between annual recertifications, the family may request an interim recertification to eliminate consideration of the asset(s). © Copyright 2021 Nan McKay & Associates, Inc.

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Assets placed by the family in nonrevocable trusts are considered assets disposed of for less than fair market value except when the assets placed in trust were received through settlements or judgments.

Separation or Divorce
The regulation also specifies that assets are not considered disposed of for less than fair market value if they are disposed of as part of a separation or divorce settlement and the applicant or tenant receives important consideration not measurable in dollar terms.

PHA Policy
All assets disposed of as part of a separation or divorce settlement will be considered assets for which important consideration not measurable in monetary terms has been received. In order to qualify for this exemption, a family member must be subject to a formal separation or divorce settlement agreement established through arbitration, mediation, or court order.

Foreclosure or Bankruptcy
Assets are not considered disposed of for less than fair market value when the disposition is the result of a foreclosure or bankruptcy sale.

Family Declaration
PHA Policy
Families must sign a declaration form at initial certification and each annual recertification identifying all assets that have been disposed of for less than fair market value or declaring that no assets have been disposed of for less than fair market value.

The PHA may verify the value of the assets disposed of if other information available to the PHA does not appear to agree with the information reported by the family.

Types of Assets
Checking and Savings Accounts
For regular checking accounts and savings accounts, cash value has the same meaning as market value. If a checking account does not bear interest, the anticipated income from the account is zero.
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PHA Policy
In determining the value of checking accounts and saving accounts, the PHA will use the current balance.

In determining the anticipated income from an interest-bearing checking or savings account, the PHA will multiply the value of the account by the current rate of interest paid on the account.

Investment Accounts Such as Stocks, Bonds, Saving Certificates, and Money Market Funds Interest or dividends earned by investment accounts are counted as actual income from assets even when the earnings are reinvested. The cash value of such an asset is determined by deducting from the market value any broker fees, penalties for early withdrawal, or other costs of converting the asset to cash.

PHA Policy
In determining the market value of an investment account, the PHA will use the value of the account on the most recent investment report.

How anticipated income from an investment account will be calculated depends on whether the rate of return is known.

For assets that are held in an investment account with a known rate of return (e.g., savings certificates), asset income will be calculated based on that known rate (market value multiplied by rate of earnings).

When the anticipated rate of return is not known (e.g., stocks), the PHA will calculate asset income based on the earnings for the most recent reporting period.

Equity in Real Property or Other Capital Investments
Equity (cash value) in a property or other capital asset is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and reasonable costs (such as broker fees) that would be incurred in selling the asset [HCV GB, p. 5-25].

PHA Policy
In determining the equity, the PHA will determine market value by examining recent sales of at least three properties in the surrounding or similar neighborhood that possess comparable factors that affect market value.
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The PHA will first use the payoff amount for the loan (mortgage) as the unpaid balance to calculate equity. If the payoff amount is not available, the PHA will use the basic loan balance information to deduct from the market value in the equity calculation.

Equity in real property and other capital investments is considered in the calculation of asset income except for the following types of assets:
• Equity accounts in HUD homeownership programs [24 CFR5.603(b)] • The value of a home currently being purchased with assistance under the HCV program Homeownership Option for the first 10 years after the purchase date of the home [24 CFR

5.603(b), Notice PIH 2012-3]
• Equity in owner-occupied cooperatives and manufactured homes in which the family lives [HCV GB, p. 5-25]
• Equity in real property when a family member’s main occupation is real estate [HCV GB, p. 5-25]. This real estate is considered a business asset, and income related to this asset will be calculated as described in section 6-I.F.
• Interests in Indian Trust lands [24 CFR 5.603(b)]
• Real property and capital assets that are part of an active business or farming operation [HCV GB, p. 5-25]
The PHA must also deduct from the equity the reasonable costs for converting the asset to cash. Using the formula for calculating equity specified above, the net cash value of real property is the market value minus the balance of the loan (mortgage) minus the expenses to convert to cash
[Notice PIH 2012-3].

PHA Policy
For the purposes of calculating expenses to convert to cash for real property, the PHA will use ten percent of the market value of the home.

A family may have real property as an asset in two ways: (1) owning the property itself and (2) holding a mortgage or deed of trust on the property. In the case of a property owned by a family member, the anticipated asset income generally will be in the form of rent or other payment for the use of the property. If the property generates no income, actual anticipated income from the asset will be zero.

In the case of a mortgage or deed of trust held by a family member, the outstanding balance (unpaid principal) is the cash value of the asset. The interest portion only of payments made to the family in accordance with the terms of the mortgage or deed of trust is counted as anticipated asset income.
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PHA Policy
In the case of capital investments owned jointly with others not living in a family’s unit, a prorated share of the property’s cash value will be counted as an asset unless the PHA determines that the family receives no income from the property and is unable to sell or otherwise convert the asset to cash.

Trusts
A trust is a legal arrangement generally regulated by state law in which one party (the creator or grantor) transfers property to a second party (the trustee) who holds the property for the benefit of one or more third parties (the beneficiaries).

Revocable Trusts
If any member of a family has the right to withdraw the funds in a trust, the value of the trust is considered an asset [HCV GB, p. 5-25]. Any income earned as a result of investment of trust funds is counted as actual asset income, whether the income is paid to the family or deposited in the trust.

Nonrevocable Trusts
In cases where a trust is not revocable by, or under the control of, any member of a family, the value of the trust fund is not considered an asset. However, any income distributed to the family from such a trust is counted as a periodic payment or a lump-sum receipt, as appropriate [24 CFR 5.603(b)]. (Periodic payments are covered in Section 6-I.H. Lump-sum receipts are discussed earlier in this section.)
Retirement Accounts
Company Retirement/Pension Accounts
In order to correctly include or exclude as an asset any amount held in a company retirement or pension account by an employed person, the PHA must know whether the money is accessible before retirement [HCV GB, p. 5-26].

While a family member is employed, only the amount the family member can withdraw without retiring or terminating employment is counted as an asset [HCV GB, p. 5-26].

After a family member retires or terminates employment, any amount distributed to the family member is counted as a periodic payment or a lump-sum receipt, as appropriate [HCV GB, p. 5- 26], except to the extent that it represents funds invested in the account by the family member. © Copyright 2021 Nan McKay & Associates, Inc.

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(For more on periodic payments, see section 6-I.H.) The balance in the account is counted as an asset only if it remains accessible to the family member.

IRA, Keogh, and Similar Retirement Savings Accounts
IRA, Keogh, and similar retirement savings accounts are counted as assets even though early withdrawal would result in a penalty [HCV GB, p. 5-25].

Personal Property
Personal property held as an investment, such as gems, jewelry, coin collections, antique/classic cars, luxury vehicles valued at $30,000.00 or higher, etc., is considered an asset [HCV GB, p. 5-25].

PHA Policy
In determining the value of personal property held as an investment, the PHA will use the family’s estimate of the value. The PHA may use other general practice methods to confirm the value of the asset if there is reason to believe that the family’s estimated value is off by $50 or more. In the event it is necessary to establish the value of personal property held for investment the family must cooperate with the appraiser, but cannot be charged any costs related to the appraisal.

Generally, personal property held as an investment generates no income until it is disposed of. If regular income is generated (e.g., income from renting the personal property), the amount that is expected to be earned in the coming year is counted as actual income from the asset.

Necessary items of personal property are not considered assets [24 CFR 5.603(b)].

PHA Policy
Necessary personal property consists of only those items not held as an investment, and may include clothing, furniture, household furnishings, jewelry, and vehicles other than antique/classic and luxury vehicles as described above, including those specially equipped for persons with disabilities.

Life Insurance
The cash value of a life insurance policy available to a family member before death, such as a whole life or universal life policy is included in the calculation of the value of the family’s assets [HCV GB 5-25]. The cash value is the surrender value. If such a policy earns dividends or interest © Copyright 2021 Nan McKay & Associates, Inc.

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that the family could elect to receive, the anticipated amount of dividends or interest is counted as income from the asset whether or not the family actually receives it.

Annuities
An “annuity” is a contract between a person and a life insurance company. An annuity accumulates and invests money and pays it out as income over time. An annuity may have a cash value countable as an asset or is providing income. An annuity may be either an asset or it may be providing income but an annuity is never both income and an asset at the same time.

Annuities have two distinct phases: the first is the accumulation phase (money is deposited in a lump sum or contributed over time in regular installments and grows through investment) and the second phase is the payout (or “annuitization”) period during which regular payments are made to the owner of the annuity usually for a specified period of time or the life of the annuity’s owner, whichever is longer.

Once the contract is “annuitized,” and payments begin, it no longer has a “cash value” and it cannot (under any circumstance) be “cashed in.”
Payments are usually monthly, but they can also be quarterly or annual. 6-I.H. PERIODIC PAYMENTS
Periodic payments are forms of income received on a regular basis. HUD regulations specify periodic payments that are and are not included in annual income.

Periodic Payments Included in Annual Income
• Periodic payments from sources such as social security, unemployment and welfare assistance, annuities, insurance policies, retirement funds, and pensions. However, periodic payments from retirement accounts, annuities, and similar forms of investments are counted only after they exceed the amount contributed by the family [24 CFR 5.609(b)(4) and (b)(3)].
• Disability or death benefits and lottery receipts paid periodically, rather than in a single lump sum [24 CFR 5.609(b)(4) and HCV, p. 5-14]
Lump-Sum Payments for the Delayed Start of a Periodic Payment Most lump sums received as a result of delays in processing periodic payments, such as unemployment or welfare assistance, are counted as income. However, lump-sum receipts for the delayed start of periodic social security or supplemental security income (SSI) payments are © Copyright 2021 Nan McKay & Associates, Inc.

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not counted as income [CFR 5.609(b)(4)].Additionally, any deferred disability benefits that are received in a lump-sum or in prospective monthly amounts from the Department of Veterans Affairs are to be excluded from annual income [FR Notice 11/24/08].

PHA Policy
When a delayed-start payment is received and reported during the period in which the PHA is processing an annual reexamination, the PHA will adjust the family share and PHA subsidy retroactively for the period the payment was intended to cover. The family may pay in full any amount due or request to enter into a repayment agreement with the PHA.

DISTRIBUTIONS FROM IRREVOCABLE TRUSTS WHEN PRINCIPAL CONSISTS OF LUMP-SUMS EXCLUDED FROM INCOME UNDER 24 CFR 5.609 (c)(3)
Periodic payments in the form of distributions to a family are not counted in annual income when those distributions are from the principal of an irrevocable trust (such as a special needs trust) and when the principal consists of lump-sum additions to family assets excluded from annual income under 24 CFR 5.609 (c)(3). Any interest accruing from such lump-sum additions are included in annual income. 24 CFR 5.603 (b)(3).

Periodic Payments Excluded from Annual Income
• Payments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the assisted family, who are unable to live alone) [24 CFR

5.609(c)(2)]. Kinship guardianship assistance payments (Kin-Gap) and other similar guardianship payments are treated the same as foster care payments and are likewise excluded from annual income [Notice PIH 2012-1].

PHA Policy
The PHA will exclude payments for the care of foster children and foster adults only if the care is provided through an official arrangement with a local welfare agency [HCV GB, p. 5-18].
• Amounts paid by a state agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home [24 CFR 5.609(c)(16)] • Amounts received under the Low-Income Home Energy Assistance Program (42 U.S.C. 1626(c)) [24 CFR 5.609(c)(17)]
• Amounts received under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858q) [24 CFR 5.609(c)(17)]
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• Earned Income Tax Credit (EITC) refund payments (26 U.S.C. 32(j)) [24 CFR 5.609(c)(17)].

Note: EITC may be paid periodically if the family elects to receive the amount due as part of payroll payments from an employer.
• Lump sums received as a result of delays in processing Social Security and SSI payments (see section 6-I.J.) [24 CFR 5.609(b)(4)].
• Lump sums or prospective monthly amounts received as deferred disability benefits from the Department of Veterans Affairs (VA) [FR Notice 11/24/08]. 6-I.I. PAYMENTS IN LIEU OF EARNINGS
Payments in lieu of earnings, such as unemployment and disability compensation, worker’s compensation, and severance pay, are counted as income [24 CFR 5.609(b)(5)] if they are received either in the form of periodic payments or in the form of a lump-sum amount or prospective monthly amounts for the delayed start of a periodic payment. If they are received in a one-time lump sum (as a settlement, for instance), they are treated as lump-sum receipts [24 CFR 5.609(c)(3)]. (See also the discussion of periodic payments in section 6-I.H and the discussion of lump-sum receipts in section 6-I.G.)
6-I.J. WELFARE ASSISTANCE
Overview
Welfare assistance is counted in annual income. Welfare assistance includes Temporary Assistance for Needy Families (TANF) and any payments to individuals or families based on need that are made under programs funded separately or jointly by federal, state, or local governments [24 CFR 5.603(b)].

Sanctions Resulting in the Reduction of Welfare Benefits [24 CFR 5.615] The PHA must make a special calculation of annual income when the welfare agency imposes certain sanctions on certain families. The full text of the regulation at 24 CFR 5.615 is provided as Exhibit 6-5. The requirements are summarized below. This rule applies only if a family was receiving HCV assistance at the time the sanction was imposed.

Covered Families
The families covered by 24 CFR 5.615 are those “who receive welfare assistance or other public assistance benefits (‘welfare benefits’) from a State or other public agency (’welfare agency’) under a program for which Federal, State or local law requires that a member of the family © Copyright 2021 Nan McKay & Associates, Inc.

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must participate in an economic self-sufficiency program as a condition for such assistance” [24 CFR 5.615(b)]
Imputed Income
When a welfare agency imposes a sanction that reduces a family’s welfare income because the family commits fraud or fails to comply with the agency’s economic self-sufficiency program or work activities requirement, the PHA must include in annual income “imputed” welfare income.

The PHA must request that the welfare agency provide the reason for the reduction of benefits and the amount of the reduction of benefits. The imputed welfare income is the amount that the benefits were reduced as a result of the sanction.

This requirement does not apply to reductions in welfare benefits: (1) at the expiration of the lifetime or other time limit on the payment of welfare benefits, (2) if a family member is unable to find employment even though the family member has complied with the welfare agency economic self-sufficiency or work activities requirements, or (3) because a family member has not complied with other welfare agency requirements [24 CFR 5.615(b)(2)].

Offsets
The amount of the imputed welfare income is offset by the amount of additional income the family begins to receive after the sanction is imposed. When the additional income equals or exceeds the imputed welfare income, the imputed income is reduced to zero [24 CFR

5.615(c)(4)].
6-I.K. PERIODIC AND DETERMINABLE ALLOWANCES [24 CFR 5.609(B)(7)] Annual income includes periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing with an assisted family.

Alimony and Child Support
The PHA must count alimony or child support amounts awarded as part of a divorce or separation agreement.

PHA Policy
The PHA will count court-awarded amounts for alimony and child support unless the PHA verifies that: (1) the payments are not being made, and (2) the family has made © Copyright 2021 Nan McKay & Associates, Inc.

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reasonable efforts to collect amounts due, including filing with courts or agencies responsible for enforcing payments [HCV GB, pp. 5-23 and 5-47].

Families who do not have court-awarded alimony and child support awards are not required to seek a court award and are not required to take independent legal action to obtain collection.

Regular Contributions or Gifts
The PHA must count as income regular monetary and nonmonetary contributions or gifts from persons not residing with an assisted family [24 CFR 5.609(b)(7)]. Temporary, nonrecurring, or sporadic income and gifts are not counted [24 CFR 5.609(c)(9)].

PHA Policy
Any contribution or gift received more than three times per year will be considered a “regular” contribution or gift, unless the amount is less than $100 per occurrence. This includes rent and utility payments made on behalf of the family and other cash or noncash contributions provided on a regular basis.

Examples of regular contributions include: (1) regular payment of a family’s bills (e.g., utilities, telephone, rent, credit cards, car payments and/or automobile insurance payments, (2) cash gift(s) exceeding $300 annually or other liquid assets provided to any family member, and (3) “in-kind” contributions such as groceries and clothing provided to the participant family on a regular basis.

Nonmonetary contributions will be valued at the cost of purchasing the items, as determined by the PHA. For contributions that may vary from month to month (e.g., utility payments), the PHA will include an average amount based upon past history. A family benefit that is used exclusively by the family, but not titled to the family (i.e., automobile, storage unit), will be counted as in-kind income. The income would include insurance, car payments, maintenance, and other vehicle expenses that are regularly paid by someone outside of the assisted household.

If the family’s expenses exceed its known income, the PHA will question the family about contributions and gifts.
6-I.L. STUDENT FINANCIAL ASSISTANCE [24 CFR 5.609(B)(9); NOTICE PIH 2015-21] In 2005, Congress passed a law (for Section 8 programs only) requiring that certain student financial assistance be included in annual income. Prior to that, the full amount of student financial assistance was excluded. For some students, the full exclusion still applies. © Copyright 2021 Nan McKay & Associates, Inc.

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Student Financial Assistance Included in Annual Income [24 CFR 5.609(b)(9); FR 4/10/06; Notice PIH 2015-21]
The regulation requiring the inclusion of certain student financial assistance applies only to students who satisfy all of the following conditions:
• They are enrolled in an institution of higher education, as defined under the Higher Education Act (HEA) of 1965.
• They are seeking or receiving Section 8 assistance on their own—that is, apart from their parents—through the HCV program, the project-based voucher program, or the moderate rehabilitation program.
• They are under 24 years of age OR they have no dependent children.

For students who satisfy these three conditions, any financial assistance in excess of tuition and any other required fees and charges received: (1) under the 1965 HEA, (2) from a private source, or (3) from an institution of higher education, as defined under the 1965 HEA, must be included in annual income.

To determine annual income in accordance with the above requirements, the PHA will use the definitions of dependent child, institution of higher education, and parents in Section 3-II.E, along with the following definitions [FR 4/10/06, pp. 18148-18150]:
• Assistance under the Higher Education Act of 1965 includes Pell Grants, Federal Supplement Educational Opportunity Grants, Academic Achievement Incentive Scholarships, State Assistance under the Leveraging Educational Assistance Partnership Program, the Robert G.

Byrd Honors Scholarship Program, and Federal Work Study programs. • Assistance from private sources means assistance from nongovernmental sources, including parents, guardians, and other persons not residing with the student in an HCV assisted unit. • Tuition and fees are defined in the same manner in which the Department of Education defines tuition and fees [Notice PIH 2015-21].
­ This is the amount of tuition and required fees covering a full academic year most frequently charged to students.
­ The amount represents what a typical student would be charged and may not be the same for all students at an institution.
­ If tuition is charged on a per-credit-hour basis, the average full-time credit hour load for an academic year is used to estimate average tuition. ­ Required fees include all fixed sum charges that are required of a large proportion of all students. Examples include, but are not limited to, writing and science lab fees and fees specific to the student’s major or program (i.e., nursing program). ­ Expenses related to attending an institution of higher education must not be included as tuition. Examples include, but are not limited to, room and board, books, © Copyright 2021 Nan McKay & Associates, Inc.

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supplies, meal plans, transportation and parking, student health insurance plans, and other non-fixed sum charges.

Student Financial Assistance Excluded from Annual Income [24 CFR 5.609(c)(6)] Any student financial assistance not subject to inclusion under 24 CFR 5.609(b)(9) is fully excluded from annual income under 24 CFR 5.609(c)(6), whether it is paid directly to the student or to the educational institution the student is attending. This includes any financial assistance received by:
• Students residing with parents who are seeking or receiving Section 8 assistance • Students who are enrolled in an educational institution that does not meet the 1965 HEA definition of institution of higher education
• Students who are over 23 AND have at least one dependent child, as defined in Section 3-II.E
• Students who are receiving financial assistance through a governmental program not authorized under the 1965 HEA.
6-I.M. ADDITIONAL EXCLUSIONS FROM ANNUAL INCOME
Other exclusions contained in 24 CFR 5.609(c) that have not been discussed earlier in this chapter include the following:
• Reimbursement of medical expenses [24 CFR 5.609(c)(4)] • Amounts received by participants in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred and which are made solely to allow participation in a specific program [24 CFR 5.609(c)(8)(iii)] • Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS) [(24 CFR 5.609(c)(8)(ii)] • Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era [24 CFR

5.609(c)(10)]
• Adoption assistance payments in excess of $480 per adopted child [24 CFR 5.609(c)(12)] • Refunds or rebates on property taxes paid on the dwelling unit [24 CFR 5.609(c)(15)] • Amounts paid by a state agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home [24 CFR 5.609(c)(16)] © Copyright 2021 Nan McKay & Associates, Inc.

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• Amounts specifically excluded by any other federal statute [24 CFR 5.609(c)(17), FR Notice 5/20/14]. HUD publishes an updated list of these exclusions periodically. It includes:
(a) The value of the allotment provided to an eligible household under the Food Stamp Act of 1977 (7 U.S.C. 2017 (b))
(b) Benefits under Section 1780 of the School Lunch Act and Child Nutrition Act of 1966, including WIC
(c) Payments to volunteers under the Domestic Volunteer Services Act of 1973 (42 U.S.C. 5044(g), 5058)
(d) Payments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626(c)) (e) Income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes (25 U.S.C. 459e)
(f) Payments or allowances made under the Department of Health and Human Services’ Low-Income Home Energy Assistance Program (42 U.S.C. 8624(f)) (g) Payments received under programs funded in whole or in part under the Workforce Investment Act of 1998 (29 U.S.C. 2931)
(h) Deferred disability benefits from the Department of Veteran Affairs, whether received as a lump sum or in monthly prospective amounts
(i) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians (Pub. L. 94-540, 90 Stat. 2503-04)
(j) Payments, funds, or distributions authorized, established, or directed by the Seneca Nation Settlement Act of 1990 (25 U.S.C. 1774f(b))
(k) The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the U. S. Claims Court, the interests of individual Indians in trust or restricted lands, including the first $2,000 per year of income received by individual Indians from funds derived from interests held in such trust or restricted lands (25 U.S.C. 1407-1408)
(l) Benefits under the Indian Veterans Housing Opportunity Act of 2010 (only applies to Native American housing programs)
(m) Allowances, earnings and payments to AmeriCorps participants under the National and Community Service Act of 1990 (42 U.S.C. 12637(d))
(n) Payments received from programs funded under Title V of the Older Americans Act of 1985 (42 U.S.C. 3056(f))
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(o) Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in In Re Agent Orangeproduct liability litigation, M.D.L. No. 381 (E.D.N.Y.) (Pub. L. 101–201 and 101–39) (p) Payments received under the Maine Indian Claims Settlement Act of 1980 (Public Law 96–420, 25 U.S.C. 1721) pursuant to 25 U.S.C. 1728(c)
(q) The value of any child care provided or arranged (or any amount received as payment for such care or reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858q) (r) Earned income tax credit (EITC) refund payments received on or after January 1, 1991 (26 U.S.C. 32(l))
(s) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima Indian Nation or the Apache Tribe of Mescalero Reservation (Pub. L. 95-433) (t) Amounts of scholarships funded under Title IV of the Higher Education Act of 1965j, including awards under federal work-study programs or under the Bureau of Indian Affairs student assistance programs (20 U.S.C. 1087uu). For Section 8 programs, the exception found in § 237 of Public Law 109–249 applies and requires that the amount of financial assistance in excess of tuition and mandatory fees shall be considered income in accordance with the provisions codified at 24 CFR 5.609(b)(9), except for those persons with disabilities as defined by 42 U.S.C. 1437a(b)(3)(E) (Pub. L. 109–249) (See Section 6-I.L. for exceptions.)
(u) Any amount of crime victim compensation (under the Victims of Crime Act) received through crime victim assistance (or payment or reimbursement of the cost of such assistance) as determined under the Victims of Crime Act because of the commission of a crime against the applicant under the Victims of Crime Act (42 U.S.C. 10602) (v) Allowances, earnings and payments to individuals participating in programs under the Workforce Investment Act of 1998 (29 U.S.C. 2931)
(w) Any amount received under the School Lunch Act and the Child Nutrition Act of 1966 (42 U.S.C. 1780(b)), including reduced-price lunches and food under the Special Supplemental Food Program for Women, Infants, and Children (WIC); (x) Payments, funds or distributions authorized, established, or directed by the Seneca Nation Settlement Act of 1990 (25 U.S.C. 1774f(b));
(y) Payments from any deferred Department of Veterans Affairs disability benefitsthat are received in a lump sum amount or in prospective monthly amounts as provided by an amendment to the definition of annual income in the U.S. Housing Act of 1937 (42 U.S.C. 1437) by Section 2608 of the Housing and Economic Recovery Act of 2008 (Pub. L. 110–289, 42 U.S.C. 4501);
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(z) Compensation received by or on behalf of a veteran for service-connected disability, death, dependency, or indemnity compensation as provided by an amendment by the Indian Veterans HousingOpportunity Act of 2010 (Pub. L. 111–269) to the definition of income applicable to programs authorized under the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101) and administered by the Office of Native American Programs; and
(aa) A lump sum or a periodic payment received by an individual Indian pursuant to the Class Action Settlement Agreement in the case entitled Elouise Cobell et al. v. Ken Salazar et al., United States District Court, District of Columbia, for a period of one year from the time of receipt of that payment as provided in the Claims Resolution Act of 2010 (Pub. L. 111–291).
(bb) Payments received under 38 U.S.C. 1833(c) to children of Vietnam veterans born with spinal bifida, children of women Vietnam veterans born with certain birth defects, and children of certain Korean service veterans born with spinal bifida (cc) Any amounts in an "individual development account" as provided by the Assets for Independence Act, as amended in 2002
(dd) Payments made from the proceeds of Indian tribal trust cases as described in Notice PIH 2013–30, "Exclusion from Income of Payments under Recent Tribal Trust Settlements" (25 U.S.C. 117b(a))
(ee) Major disaster and emergency assistance received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act and comparable disaster assistance provided by states, local governments, and disaster assistance organizations PHA Policy
• Employer Reimbursement of Mileage Expenses – Employer reimbursement for mileage expenses for use of personal vehicle is not considered income as long as the reimbursement is reasonable as compared to the Internal Revenue Service (IRS) mileage rate. Mileage logs may be required. The amount of the mileage reimbursement that exceeds the standard rate will be counted as income. • Loans – Loans to a participant/applicant from an institution are not considered income. However, “loans” from private parties are considered income if it is apparent there is little likelihood the loan will be repaid within the next three years, loans from the previous year have not been repaid, and if there was no written, well-defined notarized loan agreement executed at the time the “loan” began.

Repayment of a loan back to the participant/applicant is not considered income if documentation can be presented that the loan was made by the participant/applicant to the person repaying the loan. If no documentation is © Copyright 2021 Nan McKay & Associates, Inc.

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provided, the “repayments” are considered income. Repayments back of a loan made by the assisted household must be documented as follows in order to not count the payments as regular contributions to the family:

1. Bank statement withdrawals indicating the assisted household made the loan.

2. Cancelled checks indicating the amount of the loan and to whom the loan was paid.

3. Notarized loan repayment agreement executed around the time the loan was made, with the terms and amount of the loan.
• Employer Contributions to a Flexible Spending Account – Employer contributions to a flexible medical or childcare expense account are not considered income as long as the money is only accessible to the family as reimbursement for out-of-pocket medical or childcare expenses. However, childcare or medical expenses will not be allowed as a deduction if they are reimbursable through a flexible employer contribution account.

Documentation regarding the requirements of the account may be required. © Copyright 2021 Nan McKay & Associates, Inc.

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PART II: ADJUSTED INCOME
6-II.A. INTRODUCTION
Overview
HUD regulations require PHAs to deduct from annual income any of five mandatory deductions for which a family qualifies. The resulting amount is the family’s adjusted income. Mandatory deductions are found in 24 CFR 5.611.

5.611(a) Mandatory deductions. In determining adjusted income, the responsible entity [PHA] must deduct the following amounts from annual income:
(1) $480 for each dependent;
(2) $400 for any elderly family or disabled family;
(3) The sum of the following, to the extent the sum exceeds three percent of annual income:
(i) Unreimbursed medical expenses of any elderly family or disabled family; (ii) Unreimbursed reasonable attendant care and auxiliary apparatus expenses for each member of the family who is a person with disabilities, to the extent necessary to enable any member of the family (including the member who is a person with disabilities) to be employed.

This deduction may not exceed the earned income received by family members who are 18 years of age or older and who are able to work because of such attendant care or auxiliary apparatus; and
(4) Any reasonable childcare expenses necessary to enable a member of the family to be employed or to further his or her education.

This part covers policies related to these mandatory deductions. Verification requirements related to these deductions are found in Chapter 7.

Anticipating Expenses
PHA Policy
Generally, the PHA will use current circumstances to anticipate expenses. When possible, for costs that are expected to fluctuate during the year (e.g., childcare during school and non-school periods and cyclical medical expenses), the PHA will estimate costs based on historic data and known future costs.

If a family has an accumulated debt for medical or disability assistance expenses, the PHA will include as an eligible expense the portion of the debt that the family expects to pay during the period for which the income determination is being made. However, © Copyright 2021 Nan McKay & Associates, Inc.

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amounts previously deducted will not be allowed even if the amounts were not paid as expected in a preceding period. The PHA may require the family to provide documentation of payments made in the preceding year.
6-II.B. DEPENDENT DEDUCTION
An allowance of $480 is deducted from annual income for each dependent [24 CFR 5.611(a)(1)].

Dependent is defined as any family member other than the head, spouse, or cohead who is under the age of 18 or who is 18 or older and is a person with disabilities or a full-time student.

Foster children, foster adults, and live-in aides are never considered dependents [24 CFR

5.603(b)].
6-II.C. ELDERLY OR DISABLED FAMILY DEDUCTION
A single deduction of $400 is taken for any elderly or disabled family [24 CFR 5.611(a)(2)]. An elderly family is a family whose head, spouse, cohead, or sole member is 62 years of age or older, and a disabled family is a family whose head, spouse, cohead, or sole member is a person with disabilities [24 CFR 5.403].
6-II.D. MEDICAL EXPENSES DEDUCTION [24 CFR 5.611(A)(3)(I)] Unreimbursed medical expenses may be deducted to the extent that, in combination with any disability assistance expenses, they exceed three percent of gross annual income.

The medical expense deduction is permitted only for families in which the head, spouse, or cohead is at least 62 or is a person living with disabilities. If a family is eligible for a medical expense deduction, the medical expenses of all family members are counted [VG, p. 28].

PHA Policy
Families who claim medical expenses must submit a certification indicating if medical expenses have been, or will be, reimbursed by an outside source. It is the responsibility of the family to provide documentation of expenses in the format required by the PHA.

Expenses supported by confusing, unclear, or non-descriptive documentation will be disallowed.

Eligible Medical Expenses - Medicines, equipment, treatments and prescriptions that are for the treatment of a disability-related medical condition are eligible medical expenses.

This does not include medicines, vitamin supplements, over-the-counter medications, and treatments recommended to maintain general health, or as a preventive treatment, including medical marijuana. Treatment in a non-traditional, non-medical setting is not an eligible medical expense unless it is directly administered by a licensed medical © Copyright 2021 Nan McKay & Associates, Inc.

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professional. Proof of direct administration or supervision will be required documentation for the specific medical condition. Dental cleanings that can be anticipated based on past actual bills may be included as medical expense deductions.

Necessary and Reasonable Expenses- The PHA will only allow necessary and reasonable medical expenses and may verify the reasonableness of those expenses by obtaining information from third party service professionals.

Definition of Medical Expenses
HUD regulations define medical expenses at 24 CFR 5.603(b) to mean “medical expenses, including medical insurance premiums, that are anticipated during the period for which annual income is computed, and that are not covered by insurance.” PHA Policy
The most current IRS Publication 502, Medical and Dental Expenses, will be used as a reference to determine the costs that qualify as medical expenses.

Summary of Allowable Medical Expenses from IRS Publication 502 Services of medical professionals
Surgery and medical procedures that are
necessary, legal, non-cosmetic
Services of medical facilities
Hospitalization, long-term care, and inhome nursing services Prescription medicines and over-thecounter medications that are prescribed by a doctor; insulin.

Improvements to housing directly
related to medical needs (e.g., ramps for
a wheel chair, handrails)
Substance abuse treatment programs
Psychiatric treatment
Ambulance services and some costs of
transportation related to medical
expenses
The cost and care of necessary
equipment related to a medical
condition (e.g., eyeglasses/lenses,
hearing aids, crutches, and artificial
teeth)
Cost and continuing care of necessary
service animals
Medical insurance premiums or the cost
of a health maintenance organization
(HMO)
Note: This chart provides a summary of eligible medical expenses only. Detailed information is provided in IRS Publication 502. Medical expenses are considered only to the extent they are not reimbursed by insurance or some other source. © Copyright 2021 Nan McKay & Associates, Inc.

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Families That Qualify for Both Medical and Disability Assistance Expenses PHA Policy
This policy applies only to families in which the head, spouse, or cohead is 62 or older or is a person with disabilities.

When expenses anticipated by a family could be defined as either medical or disability assistance expenses, the PHA will consider them medical expenses unless it is clear that the expenses are incurred exclusively to enable a person with disabilities to work. 6-II.E. DISABILITY ASSISTANCE EXPENSES DEDUCTION [24 CFR 5.603(B) AND 24 CFR

5.611(A)(3)(II)]
Reasonable expenses for attendant care and auxiliary apparatus for a disabled family member may be deducted if they: (1) are necessary to enable a family member 18 years or older to work, (2) are not paid to a family member or reimbursed by an outside source, (3) in combination with any medical expenses, exceed three percent of annual income, and (4) do not exceed the earned income received by the family member who is enabled to work.

Earned Income Limit on the Disability Assistance Expense Deduction A family can qualify for the disability assistance expense deduction only if at least one family member (who may be the person with disabilities) is enabled to work [24 CFR 5.603(b)].

The disability expense deduction is capped by the amount of “earned income received by family members who are 18 years of age or older and who are able to work” because of the expense [24 CFR 5.611(a)(3)(ii)]. The earned income used for this purpose is the amount verified before any earned income disallowances or income exclusions are applied.

PHA Policy
The family must identify the family members enabled to work as a result of the disability assistance expenses. In evaluating the family’s request, the PHA will consider factors such as how the work schedule of the relevant family members relates to the hours of care provided, the time required for transportation, the relationship of the family members to the person with disabilities, and any special needs of the person with disabilities that might determine which family members are enabled to work.

When the PHA determines that the disability assistance expenses enable more than one family member to work, the expenses will be capped by the sum of the family members’ incomes.
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Eligible Disability Expenses
Examples of auxiliary apparatus are provided in the HCV Guidebook as follows: “Auxiliary apparatus are items such as wheelchairs, ramps, adaptations to vehicles, or special equipment to enable a blind person to read or type, but only if these items are directly related to permitting the disabled person or other family member to work” [HCV GB, p. 5-30].

HUD advises PHAs to further define and describe auxiliary apparatus [VG, p. 30].

Eligible Auxiliary Apparatus
PHA Policy
Expenses incurred for maintaining or repairing an auxiliary apparatus is eligible. In the case of an apparatus that is specially adapted to accommodate a person with disabilities (e.g., a vehicle or computer), the cost to maintain the special adaptations (but not maintenance of the apparatus itself) is an eligible expense. The cost of service animals trained to give assistance to persons with disabilities, including the cost of acquiring the animal, veterinary care, food, grooming, and other continuing costs of care, will be included.

Eligible Attendant Care
The family determines the type of attendant care that is appropriate for the person with disabilities.

PHA Policy
Attendant care includes, but is not limited to, reasonable costs for home medical care, nursing services, in-home or center-based care services, interpreters for persons with hearing impairments, and readers for persons with visual disabilities.

Attendant care expenses will be included for the period that the person enabled to work is employed plus reasonable transportation time. The cost of general housekeeping and personal services is not an eligible attendant care expense. However, if the person enabled to work is the person with disabilities, personal services necessary to enable the person with disabilities to work are eligible.

If the care attendant also provides other services to the family, the PHA will prorate the cost and allow only that portion of the expenses attributable to attendant care that enables a family member to work. For example, if the care provider also cares for a child who is not the person with disabilities, the cost of care must be prorated. Unless © Copyright 2021 Nan McKay & Associates, Inc.

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otherwise specified by the care provider, the calculation will be based upon the number of hours spent in each activity and/or the number of persons under care.

Payments to Family Members
No disability assistance expenses may be deducted for payments to a member of an assisted family [24 CFR 5.603(b)]. However, expenses paid to a relative who is not a member of the assisted family may be deducted if they are not reimbursed by an outside source.

Necessary and Reasonable Expenses
The family determines the type of care or auxiliary apparatus to be provided and must describe how the expenses enable a family member to work. The family must certify that the disability assistance expenses are necessary and are not paid or reimbursed by any other source.

PHA Policy
The PHA determines the reasonableness of the expenses based on typical costs of care or apparatus in the locality. To establish typical costs, the PHA will collect information from organizations that provide services and support to persons with disabilities. A family may present, and the PHA will consider, the family’s justification for costs that exceed typical costs in the area.

Families That Qualify for Both Medical and Disability Assistance Expenses PHA Policy
This policy applies only to families in which the head or spouse is 62 or older or is a person with disabilities.

When expenses anticipated by a family could be defined as either medical or disability assistance expenses, the PHA will consider them medical expenses unless it is clear that the expenses are incurred exclusively to enable a person with disabilities to work. 6-II.F. CHILD CARE EXPENSE DEDUCTION
HUD defines child care expenses at 24 CFR 5.603(b) as “amounts anticipated to be paid by the family for the care of children under 13 years of age during the period for which annual income is computed, but only where such care is necessary to enable a family member to actively seek employment, be gainfully employed, or to further his or her education and only to the extent such amounts are not reimbursed. The amount deducted shall reflect reasonable charges for © Copyright 2021 Nan McKay & Associates, Inc.

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child care. In the case of child care necessary to permit employment, the amount deducted shall not exceed the amount of employment income that is included in annual income.” Clarifying the Meaning of Child for This Deduction
Child care expenses do not include child support payments made to another on behalf of a minor who is not living in an assisted family’s household [VG, p. 26]. However, child care expenses for foster children that are living in the assisted family’s household are included when determining the family’s child care expenses [HCV GB, p. 5-29].

Qualifying for the Deduction
Determining Who Is Enabled to Pursue an Eligible Activity PHA Policy
The family must identify the family member(s) enabled to pursue an eligible activity. The term eligible activity in this section means any of the activities that may make the family eligible for a child care deduction (seeking work, pursuing an education, or being gainfully employed).

In evaluating the family’s request, the PHA will consider factors such as how the schedule for the claimed activity relates to the hours of care provided, the time required for transportation, the relationship of the family member(s) to the child, and any special needs of the child that might help determine which family member is enabled to pursue an eligible activity.

Seeking Work
PHA Policy
If the child care expense being claimed is to enable a family member to seek employment, the family must provide evidence of the family member’s efforts to obtain employment at each reexamination on a PHA proof of seeking work form. The deduction may be reduced or denied if the family member’s job search efforts are not commensurate with the child care expense being allowed by the PHA. © Copyright 2021 Nan McKay & Associates, Inc.

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Furthering Education
PHA Policy
If the child care expense being claimed is to enable a family member to further his or her education, the member must be enrolled in school (academic or vocational) or participating in a formal training program. The family member is not required to be a full-time student, but the time spent in educational activities must be commensurate with the child care claimed.

Being Gainfully Employed
PHA Policy
If the child care expense being claimed is to enable a family member to be gainfully employed, the family must provide evidence of the family member’s employment during the time that child care is being provided. Gainful employment is any legal work activity (full- or part-time) for which a family member is compensated.

Earned Income Limit on Child Care Expense Deduction
When a family member looks for work or furthers his or her education, there is no cap on the amount that may be deducted for child care – although the care must still be necessary and reasonable. However, when child care enables a family member to work, the deduction is capped by “the amount of employment income that is included in annual income” [24 CFR

5.603(b)].

The earned income used for this purpose is the amount of earned income verified after any earned income disallowances or income exclusions are applied.

When the person who is enabled to work is a person with disabilities who receives the earned income disallowance (EID) or a full-time student whose earned income above $480 is excluded, child care costs related to enabling a family member to work may not exceed the portion of the person’s earned income that actually is included in annual income. For example, if a family member who qualifies for the EID makes $15,000 but because of the EID only $5,000 is included in annual income, child care expenses are limited to $5,000.

The PHA must not limit the deduction to the least expensive type of child care. If the care allows the family to pursue more than one eligible activity, including work, the cap is calculated in proportion to the amount of time spent working [HCV GB, p. 5-30]. © Copyright 2021 Nan McKay & Associates, Inc.

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PHA Policy
When the child care expense being claimed is to enable a family member to work, only one family member’s income will be considered for a given period of time. When more than one family member works during a given period, the PHA generally will limit allowable child care expenses to the earned income of the lowest-paid member. The family may provide information that supports a request to designate another family member as the person enabled to work.

Eligible Child Care Expenses
The type of care to be provided is determined by the assisted family. The PHA may not refuse to give a family the child care expense deduction because there is an adult family member in the household that may be available to provide child care [VG, p. 26].

Allowable Child Care Activities
PHA Policy
For school-age children, costs attributable to public or private school activities during standard school hours are not considered. Expenses incurred for supervised activities after school or during school holidays (e.g., summer day camp, after-school sports league) are allowable forms of child care.

The costs of general housekeeping and personal services are not eligible. Likewise, child care expenses paid to a family member who lives in the family’s unit are not eligible; however, payments for child care to relatives who do not live in the unit are eligible.

If a child care provider also renders other services to a family or child care is used to enable a family member to conduct activities that are not eligible for consideration, the PHA will prorate the costs and allow only that portion of the expenses that is attributable to child care for eligible activities. Unless otherwise specified by the child care provider, the calculation will be based upon the number of hours spent in each activity and/or the number of persons under care.

Necessary and Reasonable Costs
Child care expenses will be considered necessary if: (1) a family adequately explains how the care enables a family member to work, actively seek employment, or further his or her education, and (2) the family certifies, and the child care provider verifies, that the expenses are not paid or reimbursed by any other source.
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PHA Policy
Child care expenses will be considered for the time required for the eligible activity plus reasonable transportation time. For child care that enables a family member to go to school, the time allowed may include not more than one half study hour for each hour spent in class.

To establish the reasonableness of child care costs, the PHA will use the schedule of child care costs from a qualified local entity that either subsidizes child care costs or licenses child care providers. Families may present, and the PHA will consider, justification for costs that exceed typical costs in the area. © Copyright 2021 Nan McKay & Associates, Inc.

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PART III: CALCULATING FAMILY SHARE AND PHA SUBSIDY
6-III.A. OVERVIEW OF RENT AND SUBSIDY CALCULATIONS
TTP Formula [24 CFR 5.628]
HUD regulations specify the formula for calculating the total tenant payment (TTP) for an assisted family. TTP is the highest of the following amounts, rounded to the nearest dollar:
• 30 percent of the family’s monthly adjusted income (adjusted income is defined in Part II) • 10 percent of the family’s monthly gross income (annual income, as defined in Part I, divided by 12)
• The welfare rent (in as-paid states only)
• A minimum rent between $0 and $50 that is established by the PHA The PHA has authority to suspend and exempt families from minimum rent when a financial hardship exists, as defined in section 6-III.B.

The amount that a family pays for rent and utilities (the family share) will never be less than the family’s TTP but may be greater than the TTP depending on the rent charged for the unit the family selects.

Welfare Rent [24 CFR 5.628]
PHA Policy
Welfare rent does not apply in this locality.

Minimum Rent [24 CFR 5.630]
PHA Policy
The minimum rent for this locality is $50.00.

Family Share [24 CFR 982.305(a)(5)]
If a family chooses a unit with a gross rent (rent to owner plus an allowance for tenant-paid utilities) that exceeds the PHA’s applicable payment standard: (1) the family will pay more than the TTP, and (2) at initial occupancy the PHA will not approve the tenancy if it would require the family share to exceed 40 percent of the family’s monthly adjusted income. COC and HOME programs cannot exceed 30 percent of family’s monthly adjusted income. Income calculated to determine the TTP will be calculated based on income verified when the RTA is issued. The © Copyright 2021 Nan McKay & Associates, Inc.

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income used for this determination must have been verified no earlier than 60 days before the family’s voucher was issued. (For a discussion of the application of payment standards, see section 6-III.C.)
PHA Subsidy [24 CFR 982.505(b)]
The PHA will pay a monthly housing assistance payment (HAP) for a family that is equal to the lower of (1) the applicable payment standard for the family minus the family’s TTP or (2) the gross rent for the family’s unit minus the TTP. (For a discussion of the application of payment standards, see section 6-III.C.)
Utility Reimbursement [24 CFR 982.514(b); 982.514(c)]
When the PHA subsidy for a family exceeds the rent to owner, the family is due a utility reimbursement. HUD permits the PHA to pay the reimbursement to the family or directly to the utility provider.

PHA Policy
The PHA will generally make utility reimbursements to the family, but in some instances may elect to directly pay the utility provider.

The PHA may make all utility reimbursement payments to qualifying families on a monthly basis or may make quarterly payments when the monthly reimbursement amount is $15.00 or less.

Reimbursements must be made once per calendar-year quarter and must be prorated if the family leaves the program in advance of its next quarterly reimbursement. The PHA must also adopt hardship policies for families for whom receiving quarterly reimbursement would create a financial hardship.

PHA Policy
The PHA will issue all utility reimbursements monthly.
6-III.B. FINANCIAL HARDSHIPS AFFECTING MINIMUM RENT [24 CFR 5.630] PHA Policy
The financial hardship rules described below does apply in this jurisdiction because the PHA has established a minimum rent of $50.00.
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Overview
If the PHA establishes a minimum rent greater than zero, the PHA must grant an exemption from the minimum rent if a family is unable to pay the minimum rent because of financial hardship.

The financial hardship exemption applies only to families required to pay the minimum rent. If a family’s TTP is higher than the minimum rent, the family is not eligible for a hardship exemption. If the PHA determines that a hardship exists, the family share is the highest of the remaining components of the family’s calculated TTP.

HUD-Defined Financial Hardship
Financial hardship includes the following situations:
(1) The family has lost eligibility for or is awaiting an eligibility determination for a federal, state, or local assistance program. This includes a family member who is a noncitizen lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to public benefits but for Title IV of the Personal Responsibility and Work Opportunity Act of 1996.

PHA Policy
A hardship will be considered to exist only if the loss of eligibility has an impact on the family’s ability to pay the minimum rent.

For a family waiting for a determination of eligibility, the hardship period will end as of the first of the month following: (1) implementation of assistance, if approved, or (2) the decision to deny assistance. A family whose request for assistance is denied may request a hardship exemption based upon one of the other allowable hardship circumstances. (2) The family would be evicted because it is unable to pay the minimum rent.

PHA Policy
For a family to qualify under this provision, the cause of the potential eviction must be the family’s failure to pay rent to the owner or tenant-paid utilities. (3) Family income has decreased because of changed family circumstances, including the loss of employment.
(4) A death has occurred in the family.
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PHA Policy
In order to qualify under this provision, a family must describe how the death has created a financial hardship (e.g., because of funeral-related expenses or the loss of the family member’s income).
(5) The family has experienced other circumstances determined by the PHA.

PHA Policy
The PHA has not established any additional hardship criteria.

Implementation of Hardship Exemption
Determination of Hardship
When a family requests a financial hardship exemption, the PHA must suspend the minimum rent requirement beginning the first of the month following the family’s request.

The PHA then determines whether the financial hardship exists and whether the hardship is temporary or long-term.

PHA Policy
The PHA defines temporary hardship as a hardship expected to last 90 days or less.

Long-term hardship is defined as a hardship expected to last more than 90 days.

When the minimum rent is suspended, the family share reverts to the highest of the remaining components of the calculated TTP. The example below demonstrates the effect of the minimum rent exemption.

Example: Impact of Minimum Rent Exemption
Assume the PHA has established a minimum rent of $50.

Family Share – No Hardship Family Share – With Hardship $0
$15
N/A
$50
30% of monthly adjusted income
10% of monthly gross income
Welfare rent
Minimum rent
$0
$15
N/A
$50
30% of monthly adjusted income
10% of monthly gross income
Welfare rent
Minimum rent
Minimum rent applies.

TTP = $50
Hardship exemption granted.

TTP = $15
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PHA Policy
To qualify for a hardship exemption, a family must submit a request for a hardship exemption in writing. The request must explain the nature of the hardship and how the hardship has affected the family’s ability to pay the minimum rent. For LEP participants, the PHA will provide appropriate language assistance in submitting this written request, in accordance with the PHA’s LEP Plan.

The PHA will make the determination of hardship within 30 calendar days.

No Financial Hardship
If the PHA determines there is no financial hardship, the PHA will reinstate the minimum rent and require the family to repay the amounts suspended.

PHA Policy
The PHA will require the family to repay the suspended amount within 30 calendar days of the PHA’s notice that a hardship exemption has not been granted.

Temporary Hardship
If the PHA determines that a qualifying financial hardship is temporary, the PHA must suspend the minimum rent for the 90-day period beginning the first of the month following the date of the family’s request for a hardship exemption.

At the end of the 90-day suspension period, the family must resume payment of the minimum rent and must repay the PHA the amounts suspended. HUD requires the PHA to offer a reasonable repayment agreement, on terms and conditions established by the PHA. The PHA also may determine that circumstances have changed and the hardship is now a long-term hardship.

PHA Policy
The PHA will enter into a repayment agreement in accordance with the procedures found in Chapter 16 of this plan.

Long-Term Hardship
If the PHA determines that the financial hardship is long-term, the PHA must exempt the family from the minimum rent requirement for so long as the hardship continues. The exemption will apply from the first of the month following the family’s request until the end of the qualifying © Copyright 2021 Nan McKay & Associates, Inc.

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hardship. When the financial hardship has been determined to be long-term, the family is not required to repay the minimum rent.

PHA Policy
The hardship period ends when any of the following circumstances apply:
(1) At an interim or annual reexamination, the family’s calculated TTP is greater than the minimum rent.
(2) For hardship conditions based on loss of income, the hardship condition will continue to be recognized until new sources of income are received that are at least equal to the amount lost. For example, if a hardship is approved because a family no longer receives a $60/month child support payment, the hardship will continue to exist until the family receives at least $60/month in income from another source or once again begins to receive the child support.
(3) For hardship conditions based upon hardship-related expenses, the minimum rent exemption will continue to be recognized until the cumulative amount exempted is equal to the expense incurred.
6-III.C. APPLYING PAYMENT STANDARDS [24 CFR 982.505; 982.503(B)] Overview
The PHA’s schedule of payment standards is used to calculate housing assistance payments for HCV families. This section covers the application of the PHA’s payment standards. The establishment and revision of the PHA’s payment standard schedule are covered in Chapter 16.

Payment standard is defined as “the maximum monthly assistance payment for a family assisted in the voucher program (before deducting the total tenant payment by the family)” [24 CFR 982.4(b)].

The payment standard for a family is the lower of (1) the payment standard for the family unit size, which is defined as the appropriate number of bedrooms for the family under the PHA’s subsidy standards [24 CFR 982.4(b)], or (2) the payment standard for the size of the dwelling unit rented by the family.

If the PHA has established an exception payment standard for a designated part of a zip code are or FMR area and a family’s unit is located in the exception area, the PHA must use the appropriate payment standard for the exception area.

The PHA is required to pay a monthly housing assistance payment (HAP) for a family that is the lower of (1) the payment standard for the family minus the family’s TTP or (2) the gross rent for the family’s unit minus the TTP.
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If during the term of the HAP contract for a family’s unit, the owner lowers the rent, the PHA will recalculate the HAP using the lower of the initial payment standard or the gross rent for the unit [HCV GB, p. 7-8].

For Deed Restricted Affordable Housing Payment Standard information, see Chapter 16 II B.

Changes in Payment Standards
When the PHA revises its payment standards during the term of the HAP contract for a family’s unit, it will apply the new payment standards in accordance with HUD regulations.

Decreases
If a PHA changes its payment standard schedule, resulting in a lower payment standard amount, during the term of a HAP contract, the PHA is not required to reduce the payment standard used to calculate subsidy for families under HAP contract as long as the HAP contract remains in effect [FR Notice 11/16/16].

However, if the PHA does choose to reduce the payment standard for families currently under HAP contract, the initial reduction to the payment standard may not be applied any earlier than the effective date of the family’s second regular reexamination following the effective date of the decrease in the payment standard amount. At that point, the PHA may either reduce the payment standard to the current amount in effect on the PHA’s payment standard schedule, or may reduce the payment standard to another amount that is higher than the normally applicable amount on the schedule. The PHA may also establish different policies for designated areas within their jurisdiction (e.g., different zip code areas).

In any case, the PHA must provide the family with at least 12 months’ notice that the payment standard is being reduced before the effective date of the change. The PHA’s policy on decreases in the payment standard during the term of the HAP contract apply to all families under HAP contract at the time of the effective date of the decrease in the payment standard within the designated area.

PHA Policy
If a PHA changes its payment standard schedule resulting in a lower payment standard amount, during the term of a HAP contract, the PHA will not reduce the payment standard used to calculate subsidy for families under HAP contract as long as the HAP contract remains in effect.

The PHA will not establish different policies for decreases in the payment standard for designated areas within their jurisdiction.
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Increases
If the payment standard is increased during the term of the contract, the increased payment standard will be used to calculate the monthly housing assistance payment for the family beginning on the effective date of the family’s first regular reexamination on or after the effective date of the increase in the payment standard.

Families requiring or requesting interim reexaminations will not have their HAP payments calculated using the higher payment standard until their next annual reexamination [HCV GB, p. 7-8].

Changes in Family Unit Size (Voucher Size)
Irrespective of any increase or decrease in the payment standard, if the family unit size increases or decreases during the contract term, the new family unit size must be used to determine the payment standard for the family in accordance with Chapter 5 Part II of this plan.

Reasonable Accommodation
If a family requires a higher payment standard as a reasonable accommodation for a family member who is a person with disabilities, the PHA is allowed to establish a higher payment standard for the family of not more than 120 percent of the published FMR. 6-III.D. APPLYING UTILITY ALLOWANCES [24 CFR 982.517]
Overview
A PHA-established utility allowance schedule is used in determining family share and PHA subsidy. A family’s utility allowance is determined by the size of the dwelling unit leased by a family or the voucher unit size for which the family qualifies using PHA subsidy standards, whichever is the lower of the two. See Chapter 5 for information on the PHA’s subsidy standards.

For policies on establishing and updating utility allowances, see Chapter 16.

Reasonable Accommodation
HCV program regulations require a PHA to approve a utility allowance amount higher than shown on the PHA’s schedule if a higher allowance is needed as a reasonable accommodation for a family member with a disability. For example, if a family member with a disability requires such an accommodation, the PHA will approve an allowance for air-conditioning, even if the PHA has determined that an allowance for air-conditioning generally is not needed. © Copyright 2021 Nan McKay & Associates, Inc.

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The family must request the higher allowance and provide the PHA with an explanation of the need for the reasonable accommodation and information about the amount of additional allowance required [HCV GB, p. 18-8].

Utility Allowance Revisions
At reexamination, the PHA must use the PHA current utility allowance schedule [HCV GB, p. 18- 8].

PHA Policy
Revised utility allowances will be applied to a family’s rent and subsidy calculations at the first annual reexamination that is effective after the allowance is adopted. 6-III.E. PRORATED ASSISTANCE FOR MIXED FAMILIES [24 CFR 5.520] HUD regulations prohibit assistance to ineligible family members. A mixed family is one that includes at least one U.S. citizen or eligible immigrant and any number of ineligible family members. The PHA must prorate the assistance provided to a mixed family. The PHA will first determine assistance as if all family members were eligible and then prorate the assistance based upon the percentage of family members that are eligible. For example, if the PHA subsidy for a family is calculated at $500 and two of four family members are ineligible, the PHA subsidy would be reduced to $250.
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EXHIBIT 6-1: ANNUAL INCOME INCLUSIONS
24 CFR 5.609
(a) Annual income means all amounts,
monetary or not, which:
(1) Go to, or on behalf of, the family head or
spouse (even if temporarily absent) or to any
other family member; or
(2) Are anticipated to be received from a
source outside the family during the 12-
month period following admission or annual
reexamination effective date; and
(3) Which are not specifically excluded in
paragraph (c) of this section.
(4) Annual income also means amounts
derived (during the 12-month period) from
assets to which any member of the family has
access.
(b) Annual income includes, but is not limited
to:
(1) The full amount, before any payroll
deductions, of wages and salaries, overtime
pay, commissions, fees, tips and bonuses, and
other compensation for personal services;
(2) The net income from the operation of a
business or profession. Expenditures for
business expansion or amortization of capital
indebtedness shall not be used as deductions
in determining net income. An allowance for
depreciation of assets used in a business or
profession may be deducted, based on
straight-line depreciation, as provided in
Internal Revenue Service regulations. Any
withdrawal of cash or assets from the
operation of a business or profession will be
included in income, except to the extent the
withdrawal is reimbursement of cash or assets
invested in the operation by the family;
(3) Interest, dividends, and other net income
of any kind from real or personal property.

Expenditures for amortization of capital
indebtedness shall not be used as deductions
in determining net income. An allowance for
depreciation is permitted only as authorized
in paragraph (b)(2) of this section. Any
withdrawal of cash or assets from an
investment will be included in income, except
to the extent the withdrawal is
reimbursement of cash or assets invested by
the family. Where the family has net family
assets in excess of $5,000, annual income
shall include the greater of the actual income
derived from all net family assets or a
percentage of the value of such assets based
on the current passbook savings rate, as
determined by HUD;
(4) The full amount of periodic amounts
received from Social Security, annuities,
insurance policies, retirement funds,
pensions, disability or death benefits, and
other similar types of periodic receipts,
including a lump-sum amount or prospective
monthly amounts for the delayed start of a
periodic amount (except as provided in
paragraph (c)(14) of this section);
(5) Payments in lieu of earnings, such as
unemployment and disability compensation,
worker's compensation and severance pay
(except as provided in paragraph (c)(3) of this
section);
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(6) Welfare assistance payments.
(i) Welfare assistance payments made under
the Temporary Assistance for Needy Families
(TANF) program are included in annual
income only to the extent such payments:
(A) Qualify as assistance under the TANF
program definition at 45 CFR 260.311; and
(B) Are not otherwise excluded under
paragraph (c) of this section.
(ii) If the welfare assistance payment includes
an amount specifically designated for shelter
and utilities that is subject to adjustment by
the welfare assistance agency in accordance
with the actual cost of shelter and utilities,
the amount of welfare assistance income to
be included as income shall consist of:
(A) The amount of the allowance or grant
exclusive of the amount specifically
designated for shelter or utilities; plus
(B) The maximum amount that the welfare
assistance agency could in fact allow the
family for shelter and utilities. If the family's
welfare assistance is ratably reduced from the
standard of need by applying a percentage,
the amount calculated under this paragraph
shall be the amount resulting from one
application of the percentage.
(7) Periodic and determinable allowances,
such as alimony and child support payments,
and regular contributions or gifts received
from organizations or from persons not
residing in the dwelling;
(8) All regular pay, special pay and allowances
of a member of the Armed Forces (except as
provided in paragraph (c)(7) of this section)
1 Text of 45 CFR 260.31 follows.
(9) For section 8 programs only and as
provided in 24 CFR 5.612, any financial
assistance, in excess of amounts received for
tuition, that an individual receives under the
Higher Education Act of 1965 (20 U.S.C. 1001
et seq.), from private sources, or from an
institution of higher education (as defined
under the Higher Education Act of 1965 (20
U.S.C. 1002)), shall be considered income to
that individual, except that financial
assistance described in this paragraph is not
considered annual income for persons over
the age of 23 with dependent children. For
purposes of this paragraph, “financial
assistance” does not include loan proceeds for
the purpose of determining income.

HHS DEFINITION OF "ASSISTANCE"
45 CFR: GENERAL TEMPORARY ASSISTANCE FOR

NEEDY FAMILIES
260.31 What does the term “assistance”
mean?
(a)(1) The term “assistance” includes cash,
payments, vouchers, and other forms of
benefits designed to meet a family’s
ongoing basic needs (i.e., for food, clothing,
shelter, utilities, household goods, personal
care items, and general incidental
expenses).
(2) It includes such benefits even when
they are:
(i) Provided in the form of payments by a
TANF agency, or other agency on its behalf,
to individual recipients; and
(ii) Conditioned on participation in work
experience or community service (or any
other work activity under 261.30 of this
chapter).
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(3) Except where excluded under
paragraph (b) of this section, it also
includes supportive services such as
transportation and child care provided to
families who are not employed.
(b) [The definition of “assistance”]
excludes: (1) Nonrecurrent, short-term
benefits that:
(i) Are designed to deal with a specific crisis
situation or episode of need;
(ii) Are not intended to meet recurrent or
ongoing needs; and
(iii) Will not extend beyond four months.
(2) Work subsidies (i.e., payments to
employers or third parties to help cover the
costs of employee wages, benefits,
supervision, and training);
(3) Supportive services such as child care
and transportation provided to families
who are employed;
(4) Refundable earned income tax credits;
(5) Contributions to, and distributions
from, Individual Development Accounts;
(6) Services such as counseling, case
management, peer support, child care
information and referral, transitional
services, job retention, job advancement,
and other employment-related services
that do not provide basic income support;
and
(7) Transportation benefits provided under
a Job Access or Reverse Commute project,
pursuant to section 404(k) of [the Social
Security] Act, to an individual who is not
otherwise receiving assistance.
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EXHIBIT 6-2: ANNUAL INCOME EXCLUSIONS
24 CFR 5.609
(c) Annual income does not include the
following:
(1) Income from employment of children
(including foster children) under the age of 18
years;
(2) Payments received for the care of foster
children or foster adults (usually persons with
disabilities, unrelated to the tenant family,
who are unable to live alone);
(3) Lump-sum additions to family assets, such
as inheritances, insurance payments
(including payments under health and
accident insurance and worker's
compensation), capital gains and settlement
for personal or property losses (except as
provided in paragraph (b)(5) of this section);
(4) Amounts received by the family that are
specifically for, or in reimbursement of, the
cost of medical expenses for any family
member;
(5) Income of a live-in aide, as defined in
Sec. 5.403;
(6) Subject to paragraph (b)(9) of this section,
the full amount of student financial assistance
paid directly to the student or to the
educational institution;
(7) The special pay to a family member
serving in the Armed Forces who is exposed to
hostile fire;
(8) (i) Amounts received under training
programs funded by HUD;
(ii) Amounts received by a person with a
disability that are disregarded for a limited
time for purposes of Supplemental Security
Income eligibility and benefits because they
are set aside for use under a Plan to Attain
Self-Sufficiency (PASS);
(iii) Amounts received by a participant in
other publicly assisted programs which are
specifically for or in reimbursement of out-ofpocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and
which are made solely to allow participation
in a specific program;
(iv) Amounts received under a resident service
stipend. A resident service stipend is a modest
amount (not to exceed $200 per month)
received by a resident for performing a
service for the PHA or owner, on a part-time
basis, that enhances the quality of life in the
development. Such services may include, but
are not limited to, fire patrol, hall monitoring,
lawn maintenance, resident initiatives
coordination, and serving as a member of the
PHA's governing board. No resident may
receive more than one such stipend during
the same period of time;
(v) Incremental earnings and benefits
resulting to any family member from
participation in qualifying State or local
employment training programs (including
training programs not affiliated with a local
government) and training of a family member
as resident management staff. Amounts
excluded by this provision must be received
under employment training programs with
clearly defined goals and objectives, and are
excluded only for the period during which the
family member participates in the
employment training program;
(9) Temporary, nonrecurring or sporadic
income (including gifts);
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(10) Reparation payments paid by a foreign
government pursuant to claims filed under
the laws of that government by persons who
were persecuted during the Nazi era;
(11) Earnings in excess of $480 for each fulltime student 18 years old or older (excluding the head of household and spouse);
(12) Adoption assistance payments in excess
of $480 per adopted child;
(13) [Reserved]
(14) Deferred periodic amounts from
supplemental security income and social
security benefits that are received in a lump
sum amount or in prospective monthly
amounts, or any deferred Department of
Veterans Affairs disability benefits that are
received in a lump sum amount or
prospective monthly amounts.
(15) Amounts received by the family in the
form of refunds or rebates under State or
local law for property taxes paid on the
dwelling unit;
(16) Amounts paid by a State agency to a
family with a member who has a
developmental disability and is living at home
to offset the cost of services and equipment
needed to keep the developmentally disabled
family member at home; or
(17) Amounts specifically excluded by any
other Federal statute from consideration as
income for purposes of determining eligibility
or benefits under a category of assistance
programs that includes assistance under any
program to which the exclusions set forth in
24 CFR 5.609(c) apply. A notice will be
published in the Federal Register and
distributed to PHAs and housing owners
identifying the benefits that qualify for this
exclusion. Updates will be published and
distributed when necessary. [See Section 6-
I.M. for a list of benefits that qualify for this
exclusion.]
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EXHIBIT 6-3: TREATMENT OF FAMILY ASSETS
24 CFR 5.603(b) Net Family Assets
(1) Net cash value after deducting reasonable
costs that would be incurred in disposing of
real property, savings, stocks, bonds, and
other forms of capital investment, excluding
interests in Indian trust land and excluding
equity accounts in HUD homeownership
programs. The value of necessary items of
personal property such as furniture and
automobiles shall be excluded.
(2) In cases where a trust fund has been
established and the trust is not revocable by,
or under the control of, any member of the
family or household, the value of the trust
fund will not be considered an asset so long as
the fund continues to be held in trust. Any
income distributed from the trust fund shall
be counted when determining annual income
under Sec. 5.609.
(3) In determining net family assets, PHAs or
owners, as applicable, shall include the value
of any business or family assets disposed of by
an applicant or tenant for less than fair
market value (including a disposition in trust,
but not in a foreclosure or bankruptcy sale)
during the two years preceding the date of
application for the program or reexamination,
as applicable, in excess of the consideration
received therefor. In the case of a disposition
as part of a separation or divorce settlement,
the disposition will not be considered to be
for less than fair market value if the applicant
or tenant receives important consideration
not measurable in dollar terms.
(4) For purposes of determining annual
income under Sec. 5.609, the term "net family
assets'' does not include the value of a home
currently being purchased with assistance
under part 982, subpart M of this title. This
exclusion is limited to the first 10 years after
the purchase date of the home.
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EXHIBIT 6-4: EARNED INCOME DISALLOWANCE FOR PERSONS WITH DISABILITIES 24 CFR 5.617 Self-sufficiency incentives for persons with disabilities–Disallowance of increase in annual income.
(a) Applicable programs. The disallowance of
earned income provided by this section is
applicable only to the following programs:

HOME Investment Partnership Program (24
CFR part 92); Housing Opportunities for
Persons with AIDS (24 CFR part 583); and the
Housing Choice Voucher Program (24 CFR part
982).
(b) Definitions. The following definitions apply
for purposes of this section.

Baseline income. The annual income
immediately prior to implementation of the
disallowance described in paragraph (c)(1) of
this section of a person with disabilities (who
is a member of a qualified family).

Disallowance. Exclusion from annual income.

Previously unemployed includes a person with
disabilities who has earned, in the twelve
months previous to employment, no more
than would be received for 10 hours of work
per week for 50 weeks at the established
minimum wage.

Qualified family. A family residing in housing
assisted under one of the programs listed in
paragraph (a) of this section or receiving
tenant-based rental assistance under one of
the programs listed in paragraph (a) of this
section.
(1) Whose annual income increases as a result
of employment of a family member who is a
person with disabilities and who was
previously unemployed for one or more years
prior to employment;
(2) Whose annual income increases as a result
of increased earnings by a family member
who is a person with disabilities during
participation in any economic self-sufficiency
or other job training program; or
(3) Whose annual income increases, as a
result of new employment or increased
earnings of a family member who is a person
with disabilities, during or within six months
after receiving assistance, benefits or services
under any state program for temporary
assistance for needy families funded under
Part A of Title IV of the Social Security Act, as
determined by the responsible entity in
consultation with the local agencies
administering temporary assistance for needy
families (TANF) and Welfare-to-Work (WTW)
programs. The TANF program is not limited to
monthly income maintenance, but also
includes such benefits and services as onetime payments, wage subsidies and transportation assistance-- provided that the
total amount over a six-month period is at
least $500.
(c) Disallowance of increase in annual
income—
(1) Initial twelve month exclusion. During the
12-month period beginning on the date a
member who is a person with disabilities of a
qualified family is first employed or the family
first experiences an increase in annual income
attributable to employment, the responsible
entity must exclude from annual income (as
defined in the regulations governing the
applicable program listed in paragraph (a) of
this section) of a qualified family any increase
in income of the family member who is a
person with disabilities as a result of
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employment over prior income of that family
member.
(2) Second twelve-month exclusion and
phase-in. Upon expiration of the 12-month
period defined in paragraph (c)(1) of this
section and for the subsequent 12-month
period, the responsible entity must exclude
from annual income of a qualified family at
least 50 percent of any increase in income of
such family member as a result of
employment over the family member’s
baseline income.
(3) Maximum 2-year disallowance. The
disallowance of increased income of an
individual family member who is a person
with disability’s as provided in paragraph
(c)(1) or (c)(2) of this section is limited to a
lifetime 24-month period. The disallowance
applies for a maximum of 12 months for
disallowance under paragraph (c)(1) of this
section and a maximum of 12 months for
disallowance under paragraph (c)(2) of this
section, during the 24-month period starting
from the initial exclusion under paragraph
(c)(1) of this section.
(4) Effect of changes on currently participating
families. Families eligible for and participating
in the disallowance of earned income under
this section prior to May 9, 2016 will continue
to be governed by this section in effect as it
existed immediately prior to that date (see 24
CFR parts 0 to 199, revised as of April 1,
2016).
(d) Inapplicability to admission. The
disallowance of increases in income as a result
of employment of persons with disabilities
under this section does not apply for purposes
of admission to the program (including the
determination of income eligibility or any
income targeting that may be applicable).
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EXHIBIT 6-5: THE EFFECT OF WELFARE BENEFIT REDUCTION
24 CFR 5.615
Public housing program and Section 8 tenant-based assistance program: How welfare benefit reduction affects family income.
(a) Applicability. This section applies to
covered families who reside in public housing
(part 960 of this title) or receive Section 8
tenant-based assistance (part 982 of this
title).
(b) Definitions. The following definitions apply
for purposes of this section:

Covered families. Families who receive
welfare assistance or other public assistance
benefits ("welfare benefits'') from a State or
other public agency ("welfare agency'') under
a program for which Federal, State, or local
law requires that a member of the family
must participate in an economic selfsufficiency program as a condition for such assistance.

Economic self-sufficiency program. See
definition at Sec. 5.603.

Imputed welfare income. The amount of
annual income not actually received by a
family, as a result of a specified welfare
benefit reduction, that is nonetheless
included in the family's annual income for
purposes of determining rent.

Specified welfare benefit reduction.
(1) A reduction of welfare benefits by the
welfare agency, in whole or in part, for a
family member, as determined by the welfare
agency, because of fraud by a family member
in connection with the welfare program; or
because of welfare agency sanction against a
family member for noncompliance with a
welfare agency requirement to participate in
an economic self-sufficiency program.
(2) "Specified welfare benefit reduction'' does
not include a reduction or termination of
welfare benefits by the welfare agency:
(i) at expiration of a lifetime or other time
limit on the payment of welfare benefits;
(ii) because a family member is not able to
obtain employment, even though the family
member has complied with welfare agency
economic self-sufficiency or work activities
requirements; or
(iii) because a family member has not
complied with other welfare agency
requirements.
(c) Imputed welfare income.
(1) A family's annual income includes the
amount of imputed welfare income (because
of a specified welfare benefits reduction, as
specified in notice to the PHA by the welfare
agency), plus the total amount of other
annual income as determined in accordance
with Sec. 5.609.
(2) At the request of the PHA, the welfare
agency will inform the PHA in writing of the
amount and term of any specified welfare
benefit reduction for a family member, and
the reason for such reduction, and will also
inform the PHA of any subsequent changes in
the term or amount of such specified welfare
benefit reduction. The PHA will use this
information to determine the amount of
imputed welfare income for a family.
(3) A family's annual income includes imputed
welfare income in family annual income, as
determined at the PHA's interim or regular
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reexamination of family income and
composition, during the term of the welfare
benefits reduction (as specified in information
provided to the PHA by the welfare agency).
(4) The amount of the imputed welfare
income is offset by the amount of additional
income a family receives that commences
after the time the sanction was imposed.

When such additional income from other
sources is at least equal to the imputed
(5) The PHA may not include imputed welfare
income in annual income if the family was not
an assisted resident at the time of sanction.
(d) Review of PHA decision.
(1) Public housing. If a public housing tenant
claims that the PHA has not correctly
calculated the amount of imputed welfare
income in accordance with HUD
requirements, and if the PHA denies the
family's request to modify such amount, the
PHA shall give the tenant written notice of
such denial, with a brief explanation of the
basis for the PHA determination of the
amount of imputed welfare income. The PHA
notice shall also state that if the tenant does
not agree with the PHA determination, the
tenant may request a grievance hearing in
accordance with part 966, subpart B of this
title to review the PHA determination. The
tenant is not required to pay an escrow
deposit pursuant to Sec. 966.55(e) for the
portion of tenant rent attributable to the
imputed welfare income in order to obtain a
grievance hearing on the PHA determination.
(2) Section 8 participant. A participant in the
Section 8 tenant-based assistance program
may request an informal hearing, in
accordance with Sec. 982.555 of this title, to
review the PHA determination of the amount
of imputed welfare income that must be
included in the family's annual income in
accordance with this section. If the family
claims that such amount is not correctly
calculated in accordance with HUD
requirements, and if the PHA denies the
family's request to modify such amount, the
PHA shall give the family written notice of
such denial, with a brief explanation of the
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basis for the PHA determination of the
amount of imputed welfare income. Such
notice shall also state that if the family does
not agree with the PHA determination, the
family may request an informal hearing on the
determination under the PHA hearing
procedure.
(e) PHA relation with welfare agency.
(1) The PHA must ask welfare agencies to
inform the PHA of any specified welfare
benefits reduction for a family member, the
reason for such reduction, the term of any
such reduction, and any subsequent welfare
agency determination affecting the amount or
term of a specified welfare benefits reduction.

If the welfare agency determines a specified
welfare benefits reduction for a family
member, and gives the PHA written notice of
such reduction, the family's annual incomes
shall include the imputed welfare income
because of the specified welfare benefits
reduction.
(2) The PHA is responsible for determining
the amount of imputed welfare income that is
included in the family's annual income as a
result of a specified welfare benefits
reduction as determined by the welfare
agency, and specified in the notice by the
welfare agency to the PHA. However, the PHA
is not responsible for determining whether a
reduction of welfare benefits by the welfare
agency was correctly determined by the
welfare agency in accordance with welfare
program requirements and procedures, nor
for providing the opportunity for review or
hearing on such welfare agency
determinations.
(3) Such welfare agency determinations are
the responsibility of the welfare agency, and
the family may seek appeal of such
determinations through the welfare agency's
normal due process procedures. The PHA shall
be entitled to rely on the welfare agency
notice to the PHA of the welfare agency's
determination of a specified welfare benefits
reduction.
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EXHIBIT 6-6: SAVINGS NATIONAL RATE
Current Savings National Rate in effect at the time the PHA established its passbook rate of .5 On May 29, 2009, the FDIC Board of Directors approved a final rule making certain revisions to the interest rate restrictions applicable to less than well-capitalized institutions under Part 337.6 of the FDIC Rules and Regulations. The final rule redefined the “national rate” as a simple average of rates paid by U.S. depository institutions as calculated by the FDIC. The national rates and rate caps for various deposit maturities and sizes are provided below.

For more information see Financial Institution Letter FIL-25-2009 Rates updated September 24, 2012
Non-Jumbo Deposits (< $100,000)
Deposit Products National Rate 1 Rate Cap 2
Savings 0.08 0.83
Interest Checking 0.05 0.80
Money Market 0.12 0.87
1 month CD 0.07 0.82
3 month CD 0.11 0.86
6 month CD 0.17 0.92
12 month CD 0.26 1.01
24 month CD 0.43 1.18
36 month CD 0.58 1.33
48 month CD 0.72 1.47
60 month CD 0.94 1.69
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Jumbo Deposits (≥ $100,000)
Deposit Products National Rate 1 Rate Cap 2
Savings 0.08 0.83
Interest Checking 0.05 0.80
Money Market 0.18 0.93
1 month CD 0.08 0.83
3 month CD 0.11 0.86
6 month CD 0.18 0.93
12 month CD 0.27 1.02
24 month CD 0.44 1.19
36 month CD 0.59 1.34
48 month CD 0.73 1.48
60 month CD 0.95 1.70
The FDIC began posting the National Rate and Rate Cap on May 18, 2009. Data is not available prior to May 18, 2009. This historical data can be accessed at Previous Rates 1National rates are calculated based on a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Data used to calculate the national rates are gathered by RateWatch. Savings and interest checking account rates are based on the $2,500 product tier while money market and certificate of deposit are based on the $10,000 and $100,000 product tiers for non-jumbo and jumbo accounts, respectively. Account types and maturities published in these tables are those most commonly offered by the banks and branches for which we have data—no fewer than 49,000 locations and as many as 81,000 locations reported. The deposit rates of credit unions are not included in the calculation.
2The rate cap is determined by adding 75 basis points to the national rate. To determine conformance with the regulation, compare rates offered by the institution, based on size and maturity of the deposit, to the rate caps. For accounts less than $100,000 use the applicable rate © Copyright 2021 Nan McKay & Associates, Inc.

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cap under the non-jumbo column, and for accounts $100,000 and over, use the rate caps under the jumbo column. Interpolation should be used for deposits with maturities not listed above. © Copyright 2021 Nan McKay & Associates, Inc.

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CHAPTER 7 : VERIFICATION
[24 CFR 982.516, 24 CFR 982.551, 24 CFR 5.230, Notice PIH 2017-12]

INTRODUCTION
The PHA must verify all information that is used to establish the family’s eligibility and level of assistance and is required to obtain written authorization from the family in order to collect the information. Applicants and program participants must cooperate with the verification process as a condition of receiving assistance. The PHA must not pass on the cost of verification to the family.

The PHA will follow the verification guidance provided by HUD in Notice PIH 2017-12 and any subsequent guidance issued by HUD. This chapter summarizes those requirements and provides supplementary PHA policies.

Part I describes the general verification process. Part II provides more detailed requirements related to family information. Part III provides information income and assets, and Part IV covers mandatory deductions.

Verification policies, rules and procedures will be modified as needed to accommodate persons with disabilities. All information obtained through the verification process will be handled in accordance with the records management policies of the PHA.

During the verification process, the PHA will provide appropriate language assistance for LEP applicants and program participants, including interpretation services and translation of any vital documents, in accordance with the PHA LEP Plan.
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PART I: GENERAL VERIFICATION REQUIREMENTS
7-I.A. FAMILY CONSENT TO RELEASE OF INFORMATION [24 CFR 982.516 AND 982.551, 24 CFR

5.230]
The family must supply any information that the PHA or HUD determines is necessary to the administration of the program and must consent to PHA verification of that information [24 CFR 982.551].

Consent Forms
It is required that all adult applicants and participants sign form HUD-9886, Authorization for Release of Information. The purpose of form HUD-9886 is to facilitate automated data collection and computer matching from specific sources and provides the family's consent only for the specific purposes listed on the form. HUD and the PHA may collect information from State Wage Information Collection Agencies (SWICAs) and current and former employers of adult family members. Only HUD is authorized to collect information directly from the Internal Revenue Service (IRS) and the Social Security Administration (SSA). Adult family members must sign other consent forms as needed to collect information relevant to the family’s eligibility and level of assistance.

Penalties for Failing to Consent [24 CFR 5.232]
If any family member who is required to sign a consent form fails to do so, the PHA will deny admission to applicants and terminate assistance of participants. The family may request an informal review (applicants) or informal hearing (participants) in accordance with PHA procedures.
7-I.B. OVERVIEW OF VERIFICATION REQUIREMENTS
HUD’s Verification Hierarchy [Notice PIH 2017-12]
HUD mandates the use of the EIV system and offers administrative guidance on the use of other methods to verify family information and specifies the circumstances in which each method will be used. In general HUD requires the PHA to use the most reliable form of verification that is available and to document the reasons when the PHA uses a lesser form of verification.

In order of priority, the forms of verification that the PHA will use are:
• Up-front Income Verification (UIV) using HUD’s Enterprise Income Verification (EIV) system
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• Up-front Income Verification (UIV) using a non-HUD system • Written Third Party Verification (may be provided by applicant or participant) • Written Third-party Verification Form
• Oral Third-party Verification
• Self-Certification
Each of the verification methods is discussed in subsequent sections below.

Requirements for Acceptable Documents
PHA Policy
Any documents used for verification must be the original (not photocopies) and generally must be dated within 60 days of the PHA request. The documents must not be damaged, altered, or in any way illegible.

Print-outs from webpages are considered original documents.

The PHA staff member who views the original document must scan the document into the PHA secure records retention system.

Any family self-certifications must be made in a format acceptable to the PHA and must be signed in the presence of a PHA representative or PHA notary public.

File Documentation
The PHA must document in the file how the figures used in income and rent calculations were determined. All verification attempts, information obtained, and decisions reached during the verification process will be recorded in the family’s file in sufficient detail to demonstrate that the PHA has followed all of the verification policies set forth in this plan. The record should be sufficient to enable a staff member or HUD reviewer to understand the process followed and conclusions reached.

PHA Policy
The PHA will document, in the family file, the following:

Reported family annual income
Value of assets
Expenses related to deductions from annual income
Other factors influencing adjusted income
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When the PHA is unable to obtain third- party verification, the PHA will document in the family file the reason that third-party verification was not available [24 CFR 982.516(a)(2); Notice PIH 2017-12].
7-I.C. UP-FRONT INCOME VERIFICATION (UIV)
Up-front income verification (UIV) refers to the PHA’s use of the verification tools available from independent sources that maintain computerized information about earnings and benefits. UIV will be used to the extent that these systems are available to the PHA.

There may be legitimate differences between the information provided by the family and UIVgenerated information. If the family disputes the accuracy of UIV data, no adverse action can be taken until the PHA has independently verified the UIV information and the family has been granted an opportunity to contest any adverse findings through the informal review/hearing process of the PHA.

See Chapter 6 for the PHA’s policy on the use of UIV/EIV to project annual income.

Upfront Income Verification Using HUD’s Enterprise Income Verification (EIV) System (Mandatory)
PHA’s must use HUD’s EIV system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations or recertification of family composition and income in accordance with 24 CFR 5.236 and administrative guidance issued by HUD. The EIV system contains data showing earned income, unemployment benefits, Social Security benefits, and SSI benefits for participant families. The following policies apply to the use of HUD’s EIV system.

EIV Income Reports
The data shown on income reports is updated quarterly. Data may be between 3 and 6 months old at the time reports are generated.

PHA Policy
The PHA will obtain income reports for annual reexaminations on a monthly basis.

Reports will be generated as part of the regular reexamination process.

Income reports will be compared to family-provided information as part of the annual reexamination process. Income reports may be used in the calculation of annual income, as described in Chapter 6-I.C. Income reports may also be used to meet the regulatory requirement for third party verification, as described above. Policies for © Copyright 2021 Nan McKay & Associates, Inc.

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resolving discrepancies between income reports and family-provided information will be resolved as described in Chapter 6-I.C. and in this chapter.

Income reports will be used in interim reexaminations to identify any discrepancies between reported income and income shown in the EIV system, and as necessary to verify earned income, and to verify and calculate, unemployment benefits, Social Security and/or SSI benefits. EIV will also be used to verify that families claiming zero income are not receiving income from any of these sources.

Income reports will be retained in participant files with the applicable annual or interim reexamination documents.

When the PHA determines through income reports and third- party verification that a family has concealed or under-reported income, corrective action will be taken pursuant to the policies in Chapter 14, Program Integrity.

EIV Identity Verification
The EIV system verifies tenant identities against SSA records. These records are compared to PIC data for a match on Social Security number, name, and date of birth.

PHAs are required to use EIV’s Identity Verification Report on a monthly basis to improve the availability of income information in EIV [Notice PIH 2017-12] When identity verification for a participant fails, a message will be displayed within the EIV system and no income information will be displayed.

PHA Policy
The PHA will identify participants whose identity verification has failed by reviewing EIV’s Identity Verification Report on a monthly basis.

The PHA will attempt to resolve PIC/SSA discrepancies by obtaining appropriate documentation from the participant. When the PHA determines that discrepancies exist due to PHA errors such as spelling errors or incorrect birth dates, the errors will be corrected promptly.

Upfront Income Verification Using Non-HUD Systems
In addition to mandatory use of the EIV system, HUD encourages PHAs to utilize other upfront verification sources.
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PHA Policy
The PHA will inform all applicants and participants of its use of the following UIV resources during the admission and reexamination process:

HUD’s EIV system
The Work Number
7-I.D. THIRD-PARTY WRITTEN AND ORAL VERIFICATION
HUD’s current verification hierarchy defines two types of written third-party verification. The more preferable form, “written third-party verification,” consists of an original document generated by a third-party source, which may be received directly from a third-party source or provided to the PHA by the family. If written third-party verification is not available, the PHA must attempt to obtain a “written third-party verification form.” This is a standardized form used to collect information from a third party.

Written Third-Party Verification [Notice PIH 2017-12]
Written third-party verification documents must be original and authentic and may be supplied by the family or received from a third-party source.

Examples of acceptable tenant-provided documents include, but are not limited to: pay stubs, payroll summary reports, employer notice or letters of hire and termination, SSA benefit verification letters, bank statements, child support payment stubs, welfare benefit letters and/or printouts, and unemployment monetary benefit notices.

The PHA is required to obtain, at minimum, two current and consecutive pay stubs for determining annual income from wages.

The PHA may reject documentation provided by the family if the document is not an original, if the document appears to be forged, or if the document is altered, mutilated, or illegible.

PHA Policy
Third-party documents provided by the family must be dated within 60 days of the PHA request date.

If the PHA determines that third-party documents provided by the family are not acceptable, the PHA will explain the reason to the family and request additional documentation.

As verification of earned income, the PHA will require the family to provide the two most current consecutive pay stubs. At the PHA’s discretion, if additional paystubs are © Copyright 2021 Nan McKay & Associates, Inc.

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needed due to the family’s circumstances (e.g., sporadic income, fluctuating schedule, etc.), the PHA may request additional paystubs or a payroll record.

Written Third-Party Verification Form
When upfront verification is not available and the family is unable to provide written thirdparty documents, the PHA must request a written third-party verification form. HUD’s position is that this traditional third-party verification method presents administrative burdens and risks which may be reduced through the use of family-provided third-party documents.

PHAs may mail, fax, or e-mail third-party written verification form requests to third-party sources.

PHA Policy
The PHA will send third-party verification forms directly to the third party.

Third-party verification forms will be sent when third-party verification documents are unavailable or are rejected by the PHA.

Oral Third-Party Verification [Notice PIH 2017-12]
For third-party oral verification, PHAs contact sources, identified by UIV techniques or by the family, by telephone or in person.

Oral third-party verification is mandatory if neither form of written third-party verification is available.

Third-party oral verification may be used when requests for written third-party verification forms have not been returned within a reasonable time--e.g., 10 business days.

PHAs should document in the file the date and time of the telephone call or visit, the name of the person contacted, the telephone number, as well as the information confirmed.

PHA Policy
In collecting third-party oral verification, PHA staff will record in the family’s file the name and title of the person contacted, the date and time of the conversation (or attempt), the telephone number used, and the facts provided.

When any source responds verbally to the initial written request for verification the PHA will accept the verbal response as oral verification but will also request that the source complete and return any verification forms that were provided. © Copyright 2021 Nan McKay & Associates, Inc.

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When Third-Party Verification is Not Required [Notice PIH 2017-12] Third-party verification may not be available in all situations. HUD has acknowledged that it may not be cost-effective or reasonable to obtain third-party verification of income, assets, or expenses when these items would have a minimal impact on the family’s total tenant payment.

PHA Policy
If the family cannot provide original documents, the PHA will pay the service charge required to obtain third-party verification, unless it is not cost effective in which case a self-certification will be acceptable as the only means of verification. The cost of verification will not be passed on to the family.

The cost of postage and envelopes to obtain third-party verification of income, assets, and expenses is not an unreasonable cost [VG, p. 18].

Primary Documents
Third-party verification is not required when legal documents are the primary source, such as a birth certificate or other legal documentation of birth.

Imputed Assets
HUD permits PHAs to accept a self-certification from a family as verification of assets disposed of for less than fair market value [HCV GB, p. 5-28].

PHA Policy
The PHA will accept a self-certification from a family as verification of assets disposed of for less than fair market value.

Value of Assets and Asset Income [24 CFR 982.5169(a)]
For families with net assets totaling $5,000 or less, the PHA may accept the family’s declaration of asset value and anticipated asset income. However, the PHA is required to obtain third-part verification of all assets regardless of the amount during the intake process and at least every three years thereafter.

PHA Policy
For families with net assets totaling $5,000 or less, the PHA will accept the family’s selfcertification of the value of family assets and anticipated asset income when applicable.

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from that asset. All family members 18 years of age and older must sign the family’s declaration.

The PHA will use third-party documentation for assets as part of the intake process, whenever a family member is added to verify the individual’s assets, and every three years thereafter.
7-I.E. SELF-CERTIFICATION
When HUD required third-party verification, self-certification, or “tenant declaration,” is used as a last resort when the PHA is unable to obtain third-party verification.

Self-certification, however, is an acceptable form of verification when:
• A source of income is fully excluded
• Net family assets total $5,000 or less and the PHA has adopted a policy to accept selfcertification at annual recertification, when applicable • The PHA has adopted a policy to implement streamlined annual recertifications for fixed sources of income (See Chapter 11)
When the PHA was required to obtain third-party verification but instead relies on a tenant declaration for verification of income, assets, or expenses, the family’s file must be documented to explain why third-party verification was not available.

PHA Policy
When information cannot be verified by a third party or by review of documents, family members will be required to submit self-certifications attesting to the accuracy of the information they have provided to the PHA.

The PHA may require a family to certify that a family member does not receive a particular type of income or benefit.

The self-certification must be made in a format acceptable to the PHA and must be signed by the family member whose information or status is being verified. All selfcertifications must be signed in the presence of a PHA representative or PHA notary public.
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Part II: Verifying FAMILY INFORMATION
7-II.A. VERIFICATION OF LEGAL IDENTITY
PHA Policy
The PHA will require families to furnish verification of legal identity for each household member.

Verification of Legal Identity for Adults Verification of Legal Identity for Children Certificate of birth, naturalization papers
Church issued baptismal certificate
Current, valid driver's license or
Department of Motor Vehicles
identification card
U.S. military discharge (DD 214)
Current U.S. passport
Current government employer
identification card with picture
Certificate of birth
Adoption papers
Custody agreement
Health and Human Services ID
Certified school records
If a document submitted by a family is illegible for any reason or otherwise questionable, more than one of these documents may be required.

If none of these documents can be provided and at the PHA’s discretion, a third party who knows the person may attest to the person’s identity. The certification must be provided in a format acceptable to the PHA and be signed in the presence of a PHA representative or PHA notary public.

Legal identity will be verified for all applicants at the time of eligibility determination and in cases where the PHA has reason to doubt the identity of a person representing him or herself to be a participant.
7-II.B. SOCIAL SECURITY NUMBERS [24 CFR 5.216, NOTICE PIH 2012-10] The family must provide documentation of a valid social security number (SSN) for each member of the household, with the exception of noncitizen individuals who do not claim eligible immigration status. Exemptions also include existing program participants who were at least 62 years of age as of January 31, 2010 and had not previously disclosed an SSN. © Copyright 2021 Nan McKay & Associates, Inc.

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Note that an individual who previously declared to have eligible immigration status may not change his or her declaration for the purpose of avoiding compliance with the SSN disclosure and documentation requirements or penalties associated with noncompliance with these requirements. Nor may the head of household opt to remove a household member from the family composition for this purpose.

The PHA must accept the following documentation as acceptable evidence of the social security number:
• An original SSN card issued by the Social Security Administration (SSA) • An original SSA-issued document, which contains the name and SSN of the individual • An original document issued by a federal, state, or local government agency, which contains the name and SSN of the individual
The PHA may only reject documentation of an SSN provided by an applicant or participant if the document is not an original document or if the original document has been altered, mutilated, is illegible, or appears to be forged.

PHA Policy
The PHA will explain to the applicant or participant the reasons the document is not acceptable and request that the individual obtain and submit acceptable documentation of the SSN to the PHA within 90 days.

In the case of Moderate Rehabilitation Single Room Occupancy (SRO) individuals, the required documentation must be provided within 90 calendar days from the date of admission into the program. The PHA must grant one additional 90-day extension if it determines that the applicant’s failure to comply was due to circumstance that were beyond the applicant’s control and could not have been reasonable foreseen.

PHA Policy
The PHA will grant one additional 90-day extension if needed for reasons beyond the participant’s control such as delayed processing of the SSN application by the SSA, natural disaster, fire, death in the family, or other emergency. If the individual fails to comply with SSN disclosure and documentation requirements upon expiration of the provided time period, the PHA will terminate the individual’s assistance.

If an applicant family includes a child under six years of age who joined the household within the six months prior to the date of voucher issuance, an otherwise eligible family may be admitted to the program and the family must provide documentation of the child’s SSN within 90 days of the effective date of the initial HAP contract. A 90-day extension will be granted if the PHA determines that the participant’s failure to comply was due to unforeseen circumstances and was outside of the participant’s control. © Copyright 2021 Nan McKay & Associates, Inc.

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PHA Policy
The PHA will grant one additional 90-day extension if needed for reasons beyond the applicant’s control, such as delayed processing of the SSN application by the SSA, natural disaster, fire, death in the family, or other emergency.

When a participant requests to add a new household member who is at least six years of age, or who is under the age of six and has an SSN, the participant must provide the complete and accurate SSN assigned to each new member at the time of reexamination or recertification, in addition to the documentation required to verify it. The PHA may not add the new household member until such documentation is provided.

When a participant requested to add a new household member who is under the age of six and has not been assigned an SSN, the participant must provide the SSN assigned to each new child and the required documentation within 90 calendar days of the child being added to the household. A 90-day extension will be granted if the PHA determines that the participant’s failure to comply was due to unforeseen circumstances and was outside of the participant’s control. During the period the PHA is awaiting documentation of the SSN, the child will be counted as part of the assisted household.

PHA Policy
The PHA will grant one additional 90-day extension if needed for reasons beyond the participant’s control such as delayed processing of the SSN application by the SSA, natural disaster, fire, death in the family, or other emergency.

Social security number must be verified only once during continuously assisted occupancy.

PHA Policy
The PHA will verify each disclosed SSN by:

Obtaining documentation from applicants and participants that is acceptable as evidence of social security numbers
Scanning the original documentation submitted, returning it to the individual, and retaining it in the file folder.

Once the individual’s verification status is classified as “verified” the PHA may, at its discretion, remove and destroy copies of documentation accepted as evidence of social security numbers.

The retention of the EIV Summary Report or Income Report is adequate documentation of an individual’s SSN.
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PHA Policy
Once an individual’s status is classified as “verified” in HUD’s EIV system, the PHA will remove and destroy copies of documentation accepted as evidence of social security numbers.

For every family member age six or older, the family must provide documentation of a valid social security number (SSN), or a self-certification stating that no SSN has been issued. The self-certification must be executed personally by any family member 18 or older, or by a parent or guardian for a minor.

If the family reports an SSN but cannot provide acceptable documentation of the number, the PHA will require a self-certification stating that documentation of the SSN cannot be provided at this time. The PHA will require documentation of the SSN within 60 calendar days from the date of the family member’s self-certification mentioned above. If the family is an applicant, assistance cannot be provided until proper documentation of the SSN is provided.

PHA Policy
The PHA will instruct the family to obtain a duplicate card from the local Social Security Administration (SSA) office.

For individuals who are at least 62 years of age and are unable to submit the required documentation of their SSN within the initial 60-day period, the PHA will grant an additional 60 calendar days to provide documentation.

Social security numbers must be verified only once during continuously assisted occupancy.

If any family member obtains an SSN after admission to the program, the new SSN must be disclosed at the next regularly scheduled reexamination. In addition, if a child reaches the age of 6 and has no SSN, the parent or guardian must execute a self-certification stating that the child has no SSN at the next regularly scheduled reexamination.

The social security numbers of household members, such as live-in aids, must be verified for the purpose of conducting criminal background checks.

If a family is unable to provide documentation of a valid SSN for any of the household members due to domestic violence, dating violence, sexual assault, or stalking, the PHA will grant the family an extension of at least 90 days in order to permit the family to obtain a replacement social security card.
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7-II.C. DOCUMENTATION OF AGE
A birth certificate or other official record of birth is the preferred form of age verification for all family members. For elderly family members an original document that provides evidence of the receipt of social security retirement benefits is acceptable.

PHA Policy
If an official record of birth or evidence of social security retirement benefits cannot be provided, the PHA will require the family to submit other documents that support the reported age of the family member (e.g., school records, driver's license if birth year is recorded) and to provide a self-certification.

Age must be verified only once during continuously assisted occupancy.

If a family is unable to provide documentation of age for any of the household members due to domestic violence, dating violence, sexual assault, or stalking, the PHA will grant the family an extension of at least 90 days in order to permit the family to obtain replacement documentation.
7-II.D. FAMILY RELATIONSHIPS
Applicants and program participants are required to identify the relationship of each household member to the head of household. Definitions of the primary household relationships are provided in the Eligibility chapter.

PHA Policy
Family relationships are verified only to the extent necessary to determine a family’s eligibility and level of assistance. Certification by the head of household normally is sufficient verification of family relationships.

Marriage
PHA Policy
Certification by the head of household is normally sufficient verification. If the PHA has reasonable doubts about a marital relationship, the PHA will require the family to document the marriage.

A marriage certificate generally is required to verify that a couple is married. © Copyright 2021 Nan McKay & Associates, Inc.

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Separation or Divorce
PHA Policy
Certification by the head of household is normally sufficient verification. If the PHA has reasonable doubts about a separation or divorce, the PHA will require the family to provide documentation of the divorce, or separation.

A certified copy of a divorce decree, signed by a court officer, is required to document that a couple is divorced.

A copy of a court-ordered maintenance or other court record is required to document a separation.

If no court document is available, documentation from a community-based agency will be accepted.

Absence of Adult Member
PHA Policy
If an adult member who was formerly a member of the household is reported to be permanently absent, the family must provide, at a minimum, two forms of evidence to support that the person is no longer a member of the family (e.g., documentation of another address at which the person resides such as a lease, utility bill, or driver’s license). In addition, the PHA will require a signed/notarized statement from the family confirming that the person is not residing in the unit including the understanding of the HUD rules regarding unauthorized occupancy.

Foster Children and Foster Adults
PHA Policy
Third-party verification from the state or local government agency responsible for the placement of the individual with the family is required. 7-II.E. VERIFICATION OF STUDENT STATUS
General Requirements
PHA Policy
The PHA requires families to provide information about the student status of all fulltime students who are 18 years of age or older. This information will be verified only if:
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The family reports full-time student status for an adult other than the head, spouse, or co-head if family member is employed.

The family reports childcare expenses to enable a family member to further his or her education.

The family includes an adult student enrolled in an institution of higher education.

If the full-time adult student has employment income. Verification of full-time student status includes:
• Written verification from the registrar’s office indicating enrollment for sufficient number of credits to be considered a full-time student by the educational institution. Full-time student status will be verified at each certification. Failure to complete the required college units will result in the loss of full-time student status.
• Head of Household will be required to complete a Notice of Student Status form at each certification.
• Certified college transcripts to verify completion of college units. • If the student has part-time enrollment status in more than one educational institution, the units may be combined to achieve full-time student status.

Restrictions on Assistance to Students Enrolled in Institutions of Higher Education This section applies only to students who are seeking assistance on their own, separately from their parents. It does not apply to students residing with parents who are seeking or receiving HCV assistance.

PHA Policy
In accordance with the verification hierarchy described in Section 7-1.B, the PHA will determine whether the student is exempt from the restrictions in 24 CFR 5.612 by verifying any one of the following exemption criteria:

The student is enrolled at an educational institution that does not meet the definition of institution of higher education in the Higher Education Act of 1965 (see Section Exhibit 3-2).

The student is at least 24 years old.

The student is a veteran, as defined in Section 3-II.E.

The student is married.
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The student has at least one dependent child, as defined in Section 3-II.E.

The student is a person with disabilities, as defined in Section 3-II.E, and was receiving assistance prior to November 30, 2005.

If the PHA cannot verify at least one of these exemption criteria, the PHA will conclude that the student is subject to the restrictions on assistance at 24 CFR 5.612. In addition to verifying the student’s income eligibility, the PHA will then proceed to verify either the student’s parents’ income eligibility (see Section 7-III.J) or the student’s independence from his/her parents (see below).

Independent Student
PHA Policy
The PHA will verify a student’s independence from his/her parents to determine that the student’s parents’ income is not relevant for determining the student’s eligibility by doing all of the following:

Reviewing and verifying previous address information to determine whether the student has established a household separate from his/her parents for at least one year or reviewing and verifying documentation relevant to determining whether the student meets the U.S. Department of Education’s definition of independent student (see Section 3-II.E)
Reviewing the student’s prior year income tax returns to verify the student is independent or verifying the student meets the U.S. Department of Education’s definition of independent youth (see section 3-II.E)
Requesting and obtaining written certification directly from the student’s parents identifying the amount of support they will be providing to the student, even if the amount of support is $0, except in cases in which the PHA determines that the student is a vulnerable youth (see section 3-II.E) 7-II.F. DOCUMENTATION OF DISABILITY
The PHA must verify the existence of a disability in order to allow certain income disallowances and deductions from income. The PHA is not permitted to inquire about the nature or extent of a person’s disability [24 CFR 100.202(c)]. The PHA may not inquire about a person’s diagnosis or details of treatment for a disability or medical condition. If the PHA receives a verification document that provides such information, the PHA will not place this information in the tenant file. Under no circumstances will the PHA request a participant’s medical record(s). For more information on health care privacy laws, see the Department of Health and Human Services’ © Copyright 2021 Nan McKay & Associates, Inc.

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website at http://www.hhs.gov/ocr/privacy.

The above cited regulation does not prohibit the following inquiries, provided these inquiries are made of all applicants, whether or not they are persons with disabilities [VG, p. 24]:
• Inquiry into an applicant’s ability to meet the requirements of ownership or tenancy • Inquiry to determine whether an applicant is qualified for a dwelling available only to persons with disabilities or to persons with a particular type of disability • Inquiry to determine whether an applicant for a dwelling is qualified for a priority available to persons with disabilities or to persons with a particular type of disability • Inquiring whether an applicant for a dwelling is a current illegal abuser or addict of a controlled substance
• Inquiring whether an applicant has been convicted of the illegal manufacture or distribution of a controlled substance
Family Members Receiving SSA Disability Benefits
Verification of the receipt of disability benefits from the Social Security Administration (SSA) is sufficient verification of disability for the purpose of qualifying for waiting list preferences (if applicable) or certain income disallowances and deductions [VG, p. 23].

PHA Policy
For family members claiming disability who receive disability benefits from the SSA, the PHA will attempt to obtain information about disability benefits through the HUD Enterprise Income Verification (EIV) system. If documentation from HUD’s EIV System is not available, the PHA will request a current (dated within the last 60 days) SSA benefit verification letter from each family member claiming disability status. If the family is unable to provide the document(s), the PHA will ask the family to request a benefit verification letter by either calling SSA at 1-800-772-1213, or by requesting it from www.ssa.gov. Once the applicant or participant receives the benefit verification letter they will be required to provide it to the PHA.

Family Members Not Receiving SSA Disability Benefits
Receipt of veteran’s disability benefits, worker’s compensation, or other non-SSA benefits based on the individual’s claimed disability are not sufficient verification that the individual meets HUD’s definition of disability in 24 CFR 5.403.

PHA Policy
For family members claiming disability who do not receive disability benefits from the SSA, a knowledgeable professional must provide third-party verification that the family member meets the HUD definition of disability. See the Eligibility chapter for the HUD © Copyright 2021 Nan McKay & Associates, Inc.

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definition of disability. The knowledgeable professional will verify whether the family member does or does not meet the HUD definition.
7-II.G. CITIZENSHIP OR ELIGIBLE IMMIGRATION STATUS [24 CFR 5.508] Overview
Housing assistance is not available to persons who are not citizens, nationals, or eligible immigrants. Prorated assistance is provided for "mixed families" containing both eligible and ineligible persons. A detailed discussion of eligibility requirements is in the Eligibility chapter.

This verifications chapter discusses HUD and PHA verification requirements related to citizenship status.

The family must provide a certification that identifies each family member as a U.S. citizen, a U.S. national, an eligible noncitizen or an ineligible noncitizen and submit the documents discussed below for each family member. Once eligibility to receive assistance has been verified for an individual it need not be collected or verified again during continuously assisted occupancy. [24 CFR 5.508(g)(5)]
If a family is unable to provide documentation of immigration status for any of the household members due to domestic violence, dating violence, sexual assault, or stalking, the PHA will grant the family an extension of at least 90 days in order to permit the family to obtain a replacement documentation.

During the eligible immigration status verification process, the PHA will provide appropriate language assistance for LEP applicants and program participants, including interpretation services and translation of any vital documents, in accordance with the PHA LEP Plan.

U.S. Citizens and Nationals
HUD requires a declaration for each family member who claims to be a U.S. citizen or national.

The declaration must be signed personally by any family member 18 or older and by a guardian for minors.

The PHA may request verification of the declaration by requiring presentation of a birth certificate, United States passport or other appropriate documentation.

PHA Policy
The PHA requires all adult applicant family members to submit verification of their citizenship. All families will be notified of the requirement to submit evidence of their citizenship status when they apply. If evidence cannot reasonably be provided by the family, the PHA may accept a signed declaration from all family members as verification of citizenship, unless the PHA receives credible information indicating that an © Copyright 2021 Nan McKay & Associates, Inc.

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individual’s declaration may not be accurate. The PHA may utilize third party verification of citizenship if available.

Eligible Immigrants
Documents Required
All family members claiming eligible immigration status must declare their status in the same manner as U.S. citizens and nationals.

The documentation required for eligible noncitizens varies depending upon factors such as the date the person entered the U.S., the conditions under which eligible immigration status has been granted, age, and the date on which the family began receiving HUD-funded assistance.

Exhibit 7-1 at the end of this chapter summarizes documents family members must provide.

PHA Verification [HCV GB, pp. 5-3 and 5-7]
For family members age 62 or older who claim to be eligible immigrants, proof of age is required in the manner described in 7-II.C. of this plan. No further verification of eligible immigration status is required.

For family members under the age of 62 who claim to be eligible immigrants, the PHA must verify immigration status with the United States Citizenship and Immigration Services (USCIS).

The PHA will follow all USCIS protocols for verification of eligible immigration status. 7-II.H. VERIFICATION OF PREFERENCE STATUS
The PHA must verify any preferences claimed by an applicant that determined placement on the waiting list.

PHA Policy
The PHA will offer a preference to any family that has been terminated from its Section 8 HCV program due to insufficient program funding. The PHA will verify this preference using the PHA’s termination records.

The PHA also offers a preference for victims of domestic violence, dating violence, sexual assault, or stalking, as described in Section 4-III.C. To verify that applicants qualify for the preference, the PHA will follow documentation requirements outlined in Section 16-IX.D.
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Displacement Preference: Families who claim they are being or have been displaced due to a disaster, government action, an eviction pursuant to the Ellis Act, Civil Code section 798.56(g) of the Mobile Home Residency Law, owner/relative occupancy from a rent controlled unit under Section 1806(a)(8) of the Santa Monica Rent Control Amendment, or owner-occupancy decontrol of a unit in a duplex or triplex must provide written verification by the displacing unit or agency of government, or by a service agency such as the Red Cross or FEMA. The PHA must also verify that the family has not yet relocated to standard replacement housing. The verification should be provided by the displacing entity.

Residency Preference: In order to verify that an applicant is a resident, the PHA will require the following documents: rent receipts, lease, utility bills, employer or agency records, school records, driver’s licenses, or voters registration records to verify residency.

For families who have been hired to work in Santa Monica, a statement from the employer will be required. The employed family member must work at least 25 hours weekly in Santa Monica.

In order to qualify for a residential preference, homeless applicants must have become homeless in Santa Monica, must meet the definition of DedicatedPLUS and must be on the Santa Monica Service Registry.

Continuum of Care or Supportive Housing Graduates: The PHA may prioritize a limited number of current Continuum of Care program participants (“CoC graduates”) or tenants residing in City-funded supportive housing properties in Santa Monica (“supportive housing graduates”) who are stable and no longer require service participation to prevent them from recycling into homelessness. Eligibility for such preference must be documented by the current supportive services provider for the CoC program participant in the form indicated in Chapter 19.

Project-Based Targeting: The PHA may offer additional preferences for the PBV program or for particular PBV projects or units. Applicants for these programs must meet additional, specific eligibility requirements.
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PART III: VERIFYING INCOME AND ASSETS
Chapter 6, Part I of this plan describes in detail the types of income that are included and excluded and how assets and income from assets are handled. Any assets and income reported by the family must be verified. This part provides PHA policies that supplement the general verification procedures specified in Part I of this chapter. 7-III.A. EARNED INCOME
PHA Policy
As verification of earned income, the PHA will require the 3 most current consecutive pay stubs dated within 60-day period prior to the PHA’s request or the recertification interview, whichever is later. In the event that 3 consecutive pay stubs dated within the 60-day period are unavailable as a result of the employer’s payroll schedule (i.e. the employer pays on a monthly basis), PHA will utilize all available pay stubs dated within the 60-day period plus any additional pay stubs up to 90 days old to provide a total of 3 consecutive pay stubs. In any case, fewer than 3 pay stubs will only be accepted in the event that the employee has been employed for less than 90 days.

Wages
PHA Policy
For wages other than tips, the family must provide originals of the two most current, consecutive pay stubs.

Tips
PHA Policy
Unless tip income is included in a family member’s W-2 by the employer, persons who work in industries where tips are standard will be required to sign a certified estimate of tips received for the prior year and tips anticipated to be received in the coming year. 7-III.B. BUSINESS AND SELF-EMPLOYMENT INCOME
PHA Policy
Business owners and self-employed persons will be required to provide:
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An audited financial statement for the previous fiscal year if an audit was conducted. If an audit was not conducted, a statement of income and expenses must be submitted and the business owner or self-employed person must certify to its accuracy.

All schedules completed for filing federal and local taxes in the preceding year.

If accelerated depreciation was used on the tax return or financial statement, an accountant's calculation of depreciation expense, computed using straight-line depreciation rules.

The PHA will provide a format for any person who is unable to provide such a statement to record income and expenses for the coming year. The business owner/self-employed person will be required to submit the information requested and to certify to its accuracy at all future reexaminations.

At any reexamination the PHA may request documents that support submitted financial statements such as manifests, appointment books, cash books, or bank statements.

If a family member has been self-employed less than three (3) months, the PHA will accept the family member's certified estimate of income and schedule an interim reexamination in three (3) months. If the family member has been self-employed for three (3) to twelve (12) months the PHA will require the family to provide documentation of income and expenses for this period and use that information to project income.
7-III.C. PERIODIC PAYMENTS AND PAYMENTS IN LIEU OF EARNINGS For policies governing streamlined income determinations for fixed sources of income, please see Chapter 11.

Social Security/SSI Benefits
PHA Policy
To verify the SS/SSI benefits of applicants, the PHA will request a current (dated within the last 60 days) SSA benefit verification letter from each family member that receives social security benefits. If the family is unable to provide the document(s), the PHA will help the applicant request a benefit verification letter from SSA’s Web site at www.ssa.gov or ask the family to request one by calling SSA at 1-800-722-1213. Once the applicant has received the benefit verification letter, they will be required to provide it to the PHA.
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To verify the SS/SSI benefits of participants, the PHA will obtain information about social security/SSI benefits through the HUD EIV System, and confirm with the participant(s) that the current listed benefit amount is correct. If the participant disputes the EIVreported benefit amount, or if benefit information is not available in HUD systems, the PHA will request a current SSA benefit verification letter from each family member that receives social security benefits. If the family is unable to provide the document(s) the PHA will help the participant request a benefit verification letter from SSA’s Web site at www.ssa,.gov or ask the family to request one by calling SSA at 1-800-772-1213. Once the participant has received the benefit verification letter, they will be required to provide it to the PHA.
7-III.D. ALIMONY OR CHILD SUPPORT
PHA Policy
The methods the PHA will use to verify alimony and child support payments differ depending on whether the family declares that it receives regular payments.

If the family declares that it receives regular payments, verification will be obtained in the following order of priority.

Copies of the receipts and/or payment stubs for the 60 days prior to PHA request
Third-party verification form from the state or local child support enforcement agency
Third-party verification form from the person paying the support Family's self-certification of amount received.

If the family declares that it receives irregular or no payments, in addition to the verification process listed above, the family must provide evidence that it has taken all reasonable efforts to collect amounts due. This may include:

A statement from any agency responsible for enforcing payment that shows the family has requested enforcement and is cooperating with all enforcement efforts
If the family has made independent efforts at collection, a written statement from the attorney or other collection entity that has assisted the family in these efforts
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7-III.E. ASSETS AND INCOME FROM ASSETS
Assets Disposed of for Less than Fair Market Value
The family must certify whether any assets have been disposed of for less than fair market value in the preceding two years. The PHA needs to verify only those certifications that warrant documentation [HCV GB, p. 5-28].

PHA Policy
The PHA will verify the value of assets disposed of only if:

The PHA does not already have a reasonable estimation of its value from previously collected information, or
The amount reported by the family in the certification appears obviously in error.

Example 1: An elderly participant reported a $10,000 certificate of deposit at the last annual reexamination and the PHA verified this amount. Now the person reports that she has given this $10,000 to her son. The PHA has a reasonable estimate of the value of the asset; therefore, re-verification of the value of the asset is not necessary.

Example 2: A family member has disposed of its 1/4 share of real property located in a desirable area and has valued her share at approximately $5,000. Based upon market conditions, this declaration does not seem realistic. Therefore, the PHA will verify the value of this asset.
7-III.F. NET INCOME FROM RENTAL PROPERTY
PHA Policy
The family must provide:

A current executed lease for the property that shows the rental amount or certification from the current tenant
A self-certification from the family members engaged in the rental of property providing an estimate of expenses for the coming year and the most recent IRS Form 1040 with Schedule E (Rental Income).

If schedule E was not prepared, the PHA will require the family members involved in the rental of property to provide a self-certification of income and expenses for the previous year and may request documentation to support the statement including: tax statements, insurance invoices, bills for reasonable maintenance and utilities, and bank statements or amortization schedules showing monthly interest expense.
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7-III.G. RETIREMENT ACCOUNTS
PHA Policy
The PHA will accept written third-party documents supplied by the family as evidence of the status of retirement accounts.

The type of original document that will be accepted depends upon the family member’s retirement status.

Before retirement, the PHA will accept an original document from the entity holding the account with a date that shows it is the most recently scheduled statement for the account but in no case earlier than 6 months from the effective date of the examination.

Upon retirement, the PHA will accept an original document from the entity holding the account that reflects any distributions of the account balance, any lump sums taken and any regular payments.

After retirement, the PHA will accept an original document from the entity holding the account dated no earlier than 12 months before that reflects any distributions of the account balance, any lump sums taken and any regular payments.
7-III.H. INCOME FROM EXCLUDED SOURCES
A detailed discussion of excluded income is provided in Chapter 6, Part I.

HUD guidance on verification of excluded income draws a distinction between income which is fully excluded and income which is only partially excluded.

For fully excluded income, the PHA is not required to follow the verification hierarchy, document why third-party verification is not available, or report the income on the 50058. Fully excluded income is defined as income that is entirely excluded from the annual income determination (for example, food stamps, earned income of a minor, or foster care funds) [Notice PIH 2013-04].

PHAs may accept a family’s signed application or reexamination form as self-certification of fully excluded income. They do not have to require additional documentation. However, if there is any doubt that a source of income qualifies for full exclusion, PHAs have the option of requiring additional verification.

For partially excluded income, the PHA is required to follow the verification hierarchy and all applicable regulations, and to report the income on the 50058. Partially excluded income is defined as income where only a certain portion of what is reported by the family qualifies to be © Copyright 2021 Nan McKay & Associates, Inc.

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excluded and the remainder is included in annual income (for example, the income of an adult full-time student, or income excluded under the earned income disallowance).

PHA Policy
The PHA will accept the family’s self-certification as verification of fully excluded income. The PHA may request additional documentation if necessary to document the income source.

The PHA will verify the source and amount of partially excluded income as described in Part 1 of this chapter.
7-III.I. ZERO ANNUAL INCOME STATUS
PHA Policy
Families who report zero income are required to complete a written certification every 3 months as long as the family continues to report that they have no income. Families that report zero income will be required to complete a zero income checklist and worksheet and provide information regarding their means of basic sustenance, such as food, utilities, transportation, etc.

This information may be used to determine family income. The PHA will check EIV sources and require the family to provide written third-party verifications to verify that income from public benefits (e.g. unemployment benefits, TANF, SS, SSI and earnings) are not being received by families claiming to have zero annual income.
7-III.J. STUDENT FINANCIAL ASSISTANCE [NOTICE PIH 2015-21] Any financial assistance, in excess of amounts received for tuition, fees, and other required charges that a person attending an institution of higher education receives under the Higher Education Act of 1965, from private sources, or from an institution of higher education must be considered income unless the student is over the age of 23 with dependent children or is residing with parents who are seeking or receiving HCV assistance [24 CFR 5.609(b)(9) and FR 4/10/06].

For students over the age of 23 with dependent children or students residing with parents who are seeking or receiving HCV assistance, the full amount of student financial assistance is excluded from annual income [24 CFR 5.609(c)(6)]. The full amount of student financial assistance is also excluded for students attending schools that do not qualify as institutions of higher education (as defined in Exhibit 3-2). Excluded amounts are verified only if, without verification, the PHA would not be able to determine whether or to what extent the income is to be excluded (see Section 7-III.H).
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PHA Policy
For a student subject to having a portion of his/her student financial assistance included in annual income in accordance with 24 CFR 5.609(b)(9), the PHA will request written third-party verification of both the source and the amount. Family-provided documents from the educational institution attended by the student will be requested, as well as documents generated by any other person or entity providing such assistance, as reported by the student such as the FAFSA (Federal Application For Student Aid) In addition, the PHA will request written verification of the student’s tuition, fees, and other required charges.

If the PHA is unable to obtain third-party written verification of the requested information, the PHA will pursue other forms of verification following the verification hierarchy in Section 7-I.B.
7-III.K. PARENTAL INCOME OF STUDENTS SUBJECT TO ELIGIBILITY RESTRICTIONS If a student enrolled at an institution of higher education is under the age of 24, is not a veteran, is not married, does not have a dependent child, and is not a person with disabilities receiving HCV assistance as of November 30, 2005, the income of the student’s parents must be considered when determining income eligibility, unless the student is determined independent from his or her parents or a vulnerable youth in accordance with PHA policy [24 CFR 5.612, FR Notice 4/10/06, p. 18146, and FR Notice 9/21/16].

This provision does not apply to students residing with parents who are seeking or receiving HCV assistance. It is limited to students who are seeking or receiving assistance on their own, separately from their parents.

PHA Policy
If the PHA is required to determine the income eligibility of a student’s parents, the PHA will request an income declaration and certification of income from the appropriate parent(s) (as determined in Section 3-II.E). The PHA will send the request directly to the parents, who will be required to certify to their income under penalty of perjury. The parents will be required to submit the information directly to the PHA. The required information must be submitted (postmarked) within 10 business days of the date of the PHA’s request or within any extended timeframe approved by the PHA.

The PHA reserves the right to request and review supporting documentation at any time if it questions the declaration or certification. Supporting documentation may include, but is not limited to, Internal Revenue Service (IRS) tax returns, consecutive and original pay stubs, bank statements, pension benefit statements, benefit award letters, and other official and authentic documents from a federal, state, or local agency. © Copyright 2021 Nan McKay & Associates, Inc.

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PART IV: VERIFYING MANDATORY DEDUCTIONS
7-IV.A. DEPENDENT AND ELDERLY/DISABLED HOUSEHOLD DEDUCTIONS The dependent and elderly/disabled family deductions require only that the PHA verify that the family members identified as dependents or elderly/disabled persons meet the statutory definitions. No further verifications are required.

Dependent Deduction
See Chapter 6 (6-II.B.) for a full discussion of this deduction. The PHA must verify that:
• Any person under the age of 18 for whom the dependent deduction is claimed is not the head, spouse, or co-head of the family and is not a foster child • Any person age 18 or older for whom the dependent deduction is claimed is not a foster adult or live-in aide, and is a person with a disability or a full-time student Elderly/Disabled Family Deduction
See Eligibility chapter for a definition of elderly and disabled families and Chapter 6 (6-II.C.) for a discussion of the deduction. The PHA must verify that the head, spouse, or co-head is 62 years of age or older or a person with disabilities.
7-IV.B. MEDICAL EXPENSE DEDUCTION
Policies related to medical expenses are found in 6-II.D. The amount of the deduction will be verified following the standard verification procedures described in Part I.

Amount of Expense
PHA Policy
Medical expenses will be verified through:

Medical Expense Claim form completed by the family.

Written third-party documents provided by the family, such as pharmacy printouts or receipts.

The PHA will make a best effort to determine what expenses from the past are likely to continue to occur in the future. The PHA will also accept evidence of monthly payments or total payments that will be due for medical expenses during the upcoming 12 months.
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Written third-party verification forms, if the family is unable to provide acceptable documentation.

If third-party or document review is not possible, written family certification as to costs anticipated to be incurred during the upcoming 12 months In addition, the PHA must verify that:
• The household is eligible for the deduction.
• The costs to be deducted are qualified medical expenses. • The expenses are not paid for or reimbursed by any other source. • Costs incurred in past years are counted only once.

Eligible Household
The medical expense deduction is permitted only for households in which the head, spouse, or co-head is at least 62, or a person with disabilities. The PHA must verify that the family meets the definition of an elderly or disabled family provided in the Eligibility chapter and as described in Chapter 7 (7-IV.A.) of this plan.

Qualified Expenses
To be eligible for the medical expenses deduction, the costs must qualify as medical expenses.

See Chapter 6 (6-II.D.) for the PHA’s policy on what counts as a medical expense.

Unreimbursed Expenses
To be eligible for the medical expenses deduction, the costs must not be reimbursed by another source.

PHA Policy
The family will be required to certify that the medical expenses are not paid or reimbursed to the family from any source. If expenses are verified through a third party, the third party must certify that the expenses are not paid or reimbursed from any other source.

Expenses Incurred in Past Years
PHA Policy
When anticipated costs are related to ongoing payment of medical bills incurred in past years, the PHA will verify:
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• The anticipated repayment schedule
• The amounts paid in the past, and
• Whether the amounts to be repaid have been deducted from the family’s annual income in past years
7-IV.C. DISABILITY ASSISTANCE EXPENSES
Policies related to disability assistance expenses are found in 6-II.E. The amount of the deduction will be verified following the standard verification procedures described in Part I.

Amount of Expense
Attendant Care
PHA Policy
The PHA will accept written third-party documents provided by the family.

If family-provided documents are not available, the PHA will provide a third-party verification form directly to the care provider requesting the needed information.

Expenses for attendant care will be verified through:

Written third-party documents provided by the family, such as receipts or cancelled checks.

Third-party verification form signed by the provider, if family provided documents are not available.

If third-party verification is not possible, written family certification as to costs anticipated to be incurred for the upcoming 12 months
Auxiliary Apparatus
PHA Policy
Expenses for auxiliary apparatus will be verified through:

Written third-party documents provided by the family, such as billing statements for purchase of auxiliary apparatus, or other evidence of monthly payments or total payments that will be due for the apparatus during the upcoming 12 months.
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Third-party verification form signed by the provider, if family provided documents are not available.

If third-party verification is not possible, written family certification of estimated apparatus costs for the upcoming 12 months.

In addition, the PHA must verify that:
• The family member for whom the expense is incurred is a person with disabilities (as described in 7-II.F above).
• The expense permits a family member, or members, to work (as described in 6-II.E.). • The expense is not reimbursed from another source (as described in 6-II.E.).

Family Member is a Person with Disabilities
To be eligible for the disability assistance expense deduction, the costs must be incurred for attendant care or auxiliary apparatus expense associated with a person with disabilities. The PHA will verify that the expense is incurred for a person with disabilities (See 7-II.F.).

Family Member(s) Permitted to Work
The PHA must verify that the expenses claimed actually enable a family member, or members, (including the person with disabilities) to work.

PHA Policy
The PHA will request third-party verification from a Rehabilitation agency or knowledgeable medical professional indicating that the person with disabilities requires attendant care or an auxiliary apparatus to be employed, or that the attendant care or auxiliary apparatus enables another family member, or members, to work (See 6-II.E.).

This documentation may be provided by the family
If third-party verification has been attempted and is either unavailable or proves unsuccessful, the family must certify that the disability assistance expense frees a family member, or members (possibly including the family member receiving the assistance), to work.

Unreimbursed Expenses
To be eligible for the disability expenses deduction, the costs must not be reimbursed by another source.
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PHA Policy
The family will be required to certify that attendant care or auxiliary apparatus expenses are not paid by or reimbursed to the family from any source. 7-IV.D. CHILD CARE EXPENSES
Policies related to child care expenses are found in Chapter 6 (6-II.F). The amount of the deduction will be verified following the standard verification procedures described in Part I of this chapter. In addition, the PHA must verify that:
• The child is eligible for care (12 or younger).
• The costs claimed are not reimbursed.
• The costs enable a family member to work, actively seek work, or further their education. • The costs are for an allowable type of childcare.
• The costs are reasonable.

Eligible Child
To be eligible for the childcare deduction, the costs must be incurred for the care of a child under the age of 13. The PHA will verify that the child being cared for (including foster children) is under the age of 13 (See 7-II.C.).

Unreimbursed Expense
To be eligible for the childcare deduction, the costs must not be reimbursed by another source.

PHA Policy
The family (and the care provider) will be required to certify that the childcare expenses are not paid or reimbursed to the family from any source.

Pursuing an Eligible Activity
The PHA must verify that the family member(s) that the family has identified as being enabled to seek work, pursue education, or be gainfully employed, are actually pursuing those activities.

PHA Policy
The PHA will verify information about how the schedule for the claimed activity relates to the hours of care provided, the time required for transportation, the time required for study (for students), the relationship of the family member(s) to the child, and any © Copyright 2021 Nan McKay & Associates, Inc.

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special needs of the child that might help determine which family member is enabled to pursue an eligible activity.

Seeking Work
Whenever possible the PHA will use documentation from a state or local agency that monitors work-related requirements (e.g., welfare or unemployment). In such cases the PHA will request family-provided verification from the agency of the member’s job seeking efforts to date and require the family to submit to the PHA any reports provided to the other agency.

In the event third-party verification is not available, the PHA will provide the family with a form on which the family member must record job search efforts. The PHA will review this information at each subsequent reexamination for which this deduction is claimed.

Furthering Education
The PHA will request third-party documentation to verify that the person permitted to further his or her education by the childcare is enrolled and provide information about the timing of classes for which the person is registered. The documentation may be provided by the family.

Gainful Employment
The PHA will seek third-party verification of the work schedule of the person who is permitted to work by the childcare. In cases in which two or more family members could be permitted to work, the work schedules for all relevant family members may be verified. The documentation may be provided by the family.

Allowable Type of Child Care
The type of care to be provided is determined by the family, but must fall within certain guidelines, as discussed in Chapter 6.

PHA Policy
The PHA will verify that the type of child care selected by the family is allowable, as described in Chapter 6 (6-II.F).

The PHA will verify that the fees paid to the child care provider cover only child care costs (e.g., no housekeeping services or personal services) and are paid only for the care © Copyright 2021 Nan McKay & Associates, Inc.

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of an eligible child (e.g., prorate costs if some of the care is provided for ineligible family members).

The PHA will verify that the childcare provider is not an assisted family member.

Verification will be made through the head of household’s declaration of family members who are expected to reside in the unit.

Reasonableness of Expenses
Only reasonable childcare costs can be deducted.

PHA Policy
The actual costs the family incurs will be compared with the PHA’s established standards of reasonableness for the type of care in the locality to ensure that the costs are reasonable.

If the family presents a justification for costs that exceed typical costs in the area, the PHA will request additional documentation, as required, to support a determination that the higher cost is appropriate.
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EXHIBIT 7-1: SUMMARY OF DOCUMENTATION REQUIREMENTS
FOR NONCITIZENS [HCV GB, PP. 5-9 AND 5-10]
• All noncitizens claiming eligible status must sign a declaration of eligible immigrant status on a form acceptable to the PHA.
• Except for persons 62 or older, all noncitizens must sign a verification consent form • Additional documents are required based upon the person's status.

Elderly Noncitizens
• A person 62 years of age or older who claims eligible immigration status also must provide proof of age such as birth certificate, passport, or documents showing receipt of SS old-age benefits.

All other Noncitizens
• Noncitizens that claim eligible immigration status also must present the applicable USCIS document. Acceptable USCIS documents are listed below.
• Form I-551 Alien Registration Receipt
Card (for permanent resident aliens)
• Form I-94 Arrival-Departure Record
annotated with one of the following:
• “Admitted as a Refugee Pursuant to
Section 207”
• “Section 208” or “Asylum”
• “Section 243(h)” or “Deportation
stayed by Attorney General”
• “Paroled Pursuant to Section 221
(d)(5) of the USCIS”
• Form I-94 Arrival-Departure Record with
no annotation accompanied by:
• A final court decision granting asylum
(but only if no appeal is taken);
• A letter from a USCIS asylum officer
granting asylum (if application is filed
on or after 10/1/90) or from a USCIS
district director granting asylum
(application filed before 10/1/90);
• A court decision granting withholding
of deportation; or
• A letter from an asylum officer
granting withholding or deportation
(if application filed on or after
10/1/90).
• Form I-688 Temporary Resident Card
annotated “Section 245A” or Section
210”.

Form I-688B Employment Authorization Card
annotated “Provision of Law 274a. 12(11)” or
“Provision of Law 274a.12”.
• A receipt issued by the USCIS indicating that an application for issuance of a replacement document in one of the above listed categories has been made and the applicant’s entitlement to the document has been verified; or
• Other acceptable evidence. If other documents are determined by the USCIS to constitute acceptable evidence of eligible immigration status, they will be announced by notice published in the Federal Register
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CHAPTER 8 : HOUSING QUALITY STANDARDS AND RENT

REASONABLENESS DETERMINATIONS
[24 CFR 982 Subpart I and 24 CFR 982.507]

INTRODUCTION
HUD requires that all units occupied by families receiving Section 8 Housing Choice Voucher (HCV) assistance meet HUD's Housing Quality Standards (HQS) and permits the PHA to establish additional requirements. The use of the term "HQS" in this plan refers to the combination of both HUD and PHA-established requirements. All units must pass an HQS inspection prior to the approval of a lease. HOME and Continuum of Care programs require annual inspections.

All other programs will be inspected at least once every 24 months during the term of the contract, and at other times as needed, to determine that the unit meets HQS. HUD also requires PHAs to determine that units rented by families assisted under the HCV program have rents that are reasonable when compared to comparable unassisted units in the market area.

This chapter explains HUD and PHA requirements related to housing quality and rent reasonableness as follows:

Part I. Physical Standards. This part discusses the physical standards required of units occupied by Section 8 HCV-assisted families and identifies decisions about the acceptability of the unit that may be made by the family based upon the family's preference. It also identifies life-threatening conditions that must be addressed on an expedited basis.

Part II. The Inspection Process. This part describes the types of inspections the PHA will make and the steps that will be taken when units do not meet HQS.

Part III. Rent Reasonableness Determinations. This part discusses the policies the PHA will use to make rent reasonableness determinations.

Special HQS requirements for homeownership, manufactured homes, and other special housing types are discussed in Chapter 15 to the extent that they apply in this jurisdiction. © Copyright 2021 Nan McKay & Associates, Inc.

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PART I: PHYSICAL STANDARDS
8-I.A. GENERAL HUD REQUIREMENTS
HUD Performance and Acceptability Standards
HUD's performance and acceptability standards for Section 8 HCV-assisted housing are provided in 24 CFR 982.401. These standards cover the following areas:
• Sanitary facilities
• Food preparation and refuse disposal
• Space and Security
• Thermal Environment
• Illumination and electricity
• Structure and materials
• Interior Air Quality
• Water Supply
• Lead-based paint
• Access
• Site and neighborhood
• Sanitary condition
• Smoke and Carbon Monoxide Detectors
A summary of HUD performance criteria is provided in Exhibit 8-1. Additional guidance on these requirements is found in the following HUD resources:
• Housing Choice Voucher Guidebook, Chapter 10.
• HUD Housing Inspection Manual for Section 8 Housing
• HUD Inspection Form, form HUD-52580 (3/01) and Inspection Checklist, form HUD-52580-A (9/00)
• HUD Notice 2003-31, Accessibility Notice: Section 504 of the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Architectural Barriers Act of 1968 and the Fair Housing Act of 1988.

Tenant Preference Items
HUD requires the PHA to enforce minimum HQS but also recognizes that certain judgments about the acceptability of the unit are left to the family. For example, the PHA must ensure that the unit contains the required sanitary facilities, but the family decides whether the cosmetic © Copyright 2021 Nan McKay & Associates, Inc.

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appearance of the facilities is acceptable. Exhibit 8-2 summarizes those items that are considered tenant preferences.

Modifications to Provide Accessibility
Under the Fair Housing Act of 1988 an owner must not refuse the request of a family that contains a person with a disability to make necessary and reasonable modifications to the unit.

Such modifications are at the family's expense. The owner may require restoration of the unit to its original condition if the modification would interfere with the owner or next occupant's full enjoyment of the premises. The owner may not increase a customarily required security deposit. However, the landlord may negotiate a restoration agreement that requires the family to restore the unit and, if necessary, to ensure the likelihood of restoration, may require the tenant to pay a reasonable amount into an interest-bearing escrow account over a reasonable period of time. The interest in any such account accrues to the benefit of the tenant. The owner may also require reasonable assurances that the quality of the work will be acceptable and that any required building permits will be obtained. [24 CFR 100.203; Notice 2003-31].

Modifications to units to provide access for a person with a disability must meet all applicable HQS requirements and conform to the design, construction, or alteration of facilities contained in the UFAS and the ADA Accessibility Guidelines (ADAAG) [28 CFR 35.151(c) and Notice 2003- 31] See Chapter 2 of this plan for additional information on reasonable accommodations for persons with disabilities.

PHA Policy
Any owner that intends to negotiate a restoration agreement or require an escrow account must submit the agreement(s) to the PHA for review. 8-I.B. ADDITIONAL LOCAL REQUIREMENTS
The PHA may impose variations to the HQS as long as the additional criteria are not likely to adversely affect the health or safety of participant families or severely restrict housing choices for families. HUD approval is required for variations to the HQS. HUD approval is not required if the variations are clarifications of HUD's acceptability criteria or performance standards [24 CFR 982.401(a)(4)].

Thermal Environment [HCV GB p.10-7]
The PHA must define a “healthy living environment” for the local climate. This may be done by establishing a temperature that the heating system must be capable of maintaining, that is appropriate for the local climate.
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PHA Policy
The heating system must be functioning when the temperature outside is 60 degrees Fahrenheit or below.

Clarifications of HUD Requirements
PHA Policy
As permitted by HUD, the PHA has adopted the following specific requirements that elaborate on HUD standards.

Security
If window security bars or security screens are present on emergency exit windows, they must be equipped with a quick release system. The owner is responsible for ensuring that the family is instructed on the use of the quick release system.

Water Heaters
Requirements for water heaters apply to all water heaters in the assisted unit and in the common areas of the building in which the unit is located. All gas water heaters must have a gas shut-off valve. All water heaters must have a cold-water shut-off valve. All water heaters must have the correct temperaturepressure relief valve according to the psi needed for the size of the water heater.

Discharge line must be copper, galvanized or high-heat PVC and of proper length.

To ensure against explosion and fire due to earthquakes, all gas water heaters must be properly secured in accordance with their size as prescribed by Code for new installations and by manufacturer’s specifications. Water heaters used by the assisted unit are the responsibility of the owner of the unit even if they are not in the direct control and/or sole ownership of that owner (e.g. condominium).

Smoke Detectors
Each dwelling unit must contain at least one battery-operated or hard-wired smoke detector in proper working condition on each level of the unit. If the unit is occupied by hearing-impaired persons, smoke detectors must have an alarm system designed for hearing-impaired persons in each bedroom occupied by a hearing-impaired person. A smoke detector must be installed in each sleeping area and in areas such as hallways that give access to sleeping areas. If two © Copyright 2021 Nan McKay & Associates, Inc.

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bedrooms are immediately adjacent, one detector may be located between them at the discretion of the inspector. Tenants are responsible for providing and replacing batteries for battery-powered units except at initial occupancy.

Carbon Monoxide Detectors
California Health and Safety Code Section 17926 ET requires that owner install a carbon monoxide device, approved and listed by the State Fire Marshal pursuant to Section 13263 in each existing dwelling unit having a fossil fuel burning heater or appliance, fireplace, or an attached garage.

Regulation of Smoking
Under Santa Monica Municipal Code § 4.44, units are designated as either “Smoking” or “NonSmoking” by the landlord. Units currently occupied by a tenant which are designated as “Smoking” units will continue as such and be grandfathered for the lifetime of that tenant’s lease.

PHA Policy
Tenants and owners requesting more information regarding the smoking ordinance will be referred to: smconsumer.org or directed to call the City Attorney's Office at 310-458- 8336 for assistance.
8-I.C. LIFE-THREATENING CONDITIONS [24 CFR 982.404(A); FR NOTICE 1/18/17] HUD requires the PHA to define life-threatening conditions and to notify the owner or the family (whichever is responsible) of the corrections required. The responsible party must correct life-threatening conditions within 24 hours of PHA notification.

PHA Policy
The following are considered life-threatening conditions:

Any condition that jeopardizes the security of the unit Major plumbing leaks or flooding, waterlogged ceiling or floor in imminent danger of falling
Natural or LP gas or fuel oil leaks
A fuel storage vessel, fluid line, valve, or connection that supplies fuel to a HVAC unit is leaking or a strong odor is detected with potential for explosion or fire or that results in a health risk if inhaled Any electrical problem or condition that could result in shock or fire © Copyright 2021 Nan McKay & Associates, Inc.

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A light fixture is readily accessible, is not securely mounted to the ceiling or wall, and electrical connections or wires are exposed A light fixture is hanging by its wires
A light fixture has a missing or broken bulb, and the open socket is readily accessible to the tenant during the day-to-day use of the unit A receptacle (outlet) or switch is missing or broken and electrical connections or wires are exposed
An open circuit breaker position is not appropriately blanked off in a panel board, main panel board, or other electrical box that contains circuit breakers or fuses
A cover is missing from any electrical device box, panel box, switch gear box, control panel, etc., and there are exposed electrical connections Any nicks, abrasions, or fraying of the insulation that exposes conducting wire
Exposed bare wires or electrical connections
Any condition that results in openings in electrical panels or electrical control device enclosures
Water leaking or ponding near any electrical device
Any condition that poses a serious risk of electrocution or fire and poses an immediate life-threatening condition
Absence of a working heating system when outside temperature is below 60 degrees Fahrenheit.

Utilities not in service, including no running hot water, unless tenant is responsible for utilities.

Conditions that present the imminent possibility of injury Obstacles that prevent safe entrance or exit from the unit Any components that affect the function of the fire escape are missing or damaged
Stored items or other barriers restrict or prevent the use of the fire escape in the event of an emergency
The building’s emergency exit is blocked or impeded, thus limiting the ability of occupants to exit in a fire or other emergency Absence of a functioning toilet in the unit
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Broken glass where someone could be injured
Inoperable or missing smoke detectors
Missing or inoperable carbon monoxide detector
Missing, damaged, discharged, overcharged, or expired fire extinguisher (where required)
Gas/oil-fired water heater or heating, ventilation, or cooling system with missing, damaged, improper, or misaligned chimney venting
The chimney or venting system on a fuel-fired water heater is misaligned, negatively pitched, or damaged, which may cause improper or dangerous venting or gases
A gas dryer vent is missing, damaged, or is visually determined to be inoperable, or the dryer exhaust is not vented to the outside A fuel-fired space heater is not properly vented or lacks available combustion air
A non-vented space heater is present
Safety devices on a fuel-fired space heater are missing or damaged The chimney or venting system on a fuel-fired heating, ventilation, or cooling system is misaligned, negatively pitched, or damaged, which may cause improper or dangerous venting of gas
Deteriorating paint as defined at 24 CFR 35.110 in a unit built before 1978 that is to be occupied by a family with a child under six years of age if it would prevent the family from moving into the unit If an owner fails to correct life-threatening conditions as required by the PHA, the PHA will enforce the HQS in accordance with HUD requirements. See 8-II-G.

If a family fails to correct a family caused life-threatening condition as required by the PHA, the PHA will enforce the family obligations. See 8-II.H.

The owner will be required to repair an inoperable smoke detector unless the PHA determines that the family has intentionally disconnected it (by removing batteries or other means). In this case, the family will be required to repair the smoke detector within 24 hours.
8-I.D. OWNER AND FAMILY RESPONSIBILITIES [24 CFR 982.404] Family Responsibilities
The family is responsible for correcting the following HQS deficiencies:
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• Tenant-paid utilities not in service
• Failure to provide or maintain appliances owned by the family • Damage to the unit or premises caused by a household member or guest beyond normal wear and tear that result in a breach of the HQS. "Normal wear and tear" is defined as items which could not be charged against the tenant's security deposit under state law or court practice.

PHA Policy
The family is responsible to notify the owner in writing of any/all items needing repair in the apartment or other issues related to damage or inoperability in the apartment, whether they are tenant caused or the result of normal wear and tear.

Owner Responsibilities
The owner is responsible for all HQS violations not listed as a family responsibility above, even if the violation is caused by the family's living habits (e.g., vermin infestation). However, if the family's actions constitute a serious lease violation the owner may take legal action to evict the family.
8-I.E. SPECIAL REQUIREMENTS FOR CHILDREN WITH ELEVATED BLOOD LEAD LEVEL [24 CFR

35.1225; FR NOTICE 1/13/17; NOTICE PIH 2017-13]
If a PHA is notified by a public health department or other medical health care provider, or verifies information from a source other than a public health department or medical health care provider, that a child of less than six years of age, living in an HCV-assisted unit has been identified as having an elevated blood lead level, the PHA must complete an environmental investigation of the dwelling unit within 15 calendar days after being notified by a public health department or other medical health care provider. The environmental investigation must be completed in accordance with program requirements, and the result of the environmental investigation must be immediately provided to the owner of the dwelling unit. In cases where the public health department has already completed an evaluation of the unit, this information must be provided to the owner.

Within 30 days after receiving the environmental investigation report from the PHA, or the evaluation from the public health department, the owner is required to complete the reduction of identified lead-based paint hazards in accordance with the lead-based paint regulations [24 CFR 35.1325 and 35.1330; 40 CFR 745.227]. If the owner does not complete the “hazard reduction” as required, the dwelling unit is in violation of HQS and the PHA will take action in accordance with Section 8-II.G.

PHA reporting requirements, and data collection and record keeping responsibilities related to children with an elevated blood lead level are discussed in Chapter 16. © Copyright 2021 Nan McKay & Associates, Inc.

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8-I.F. VIOLATION OF HQS SPACE STANDARDS [24 CFR 982.401, 24 CFR 982.403] A dwelling unit must:
• Provide adequate space and security for the family
• Have at least one bedroom or living/sleeping room for each two persons A unit that does not meet these HQS space standards is defined as overcrowded.

A living room may be used as sleeping (bedroom) space, but no more than two persons may occupy the space [HCV GB p. 10-6]. A bedroom or living/sleeping room must have at least:
• One window
• Two electrical outlets in proper operating condition (permanent overhead or wall-mounted light fixtures may count as one of the required electrical outlets) If the PHA determines that a unit is overcrowded because of an increase in family size or a change in family composition, the PHA must issue the family a new voucher, and the family and PHA must try to find an acceptable unit as soon as possible. If an acceptable unit is available for rental by the family, the PHA must terminate the HAP contract in accordance with its terms. 8-I.G. BED BUG INFESTATION [NOTICE PIH 2012-5]
Bed bugs are a growing national problem. The purpose of this policy is to set forth the roles and responsibilities of all parties (The PHA, Tenant, and Landlord) in minimizing the potential for bed bugs. The policy will also provide guidance in cases where bed bugs are present in order to eliminate them as quickly as possible.

Bed bugs are difficult to contain without the proper treatment. Therefore, it is imperative that all parties work simultaneously toward a common goal, extermination and elimination. Left untreated, bed bugs can spread throughout a residence affecting current and future tenants.

PHA Policy
Subsequent to an assertion by the tenant that the contract unit has bed bugs, the presence of bed bugs in the contract unit must be observed and documented by a County of Los Angeles inspector (as a neutral third-party). The PHA does not have direct responsibility for bed bug removal. As stated in both the Housing Quality Standards (HQS) and the contract, landlords are responsible to ensure the dwelling unit and its equipment must be sanitary condition and free of vermin infestation. If the contract is violated, the cancelation process outlined in the PHA’s Administrative Plan will be followed. © Copyright 2021 Nan McKay & Associates, Inc.

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Landlord Roles and Responsibilities
The contract requires the landlord to maintain the contract unit and its premises in accordance with Housing Quality Standards (HQS). If bed bugs are present (as observed and documented by a County of Los Angeles inspector), it is the responsibility of the landlord, as stated in the HQS (CFR 982.401), to ensure that the dwelling unit and its equipment be in sanitary condition and free of vermin and rodent infestation. In order to comply with the HQS, if the presence of bed bugs is suspected, the landlord must notify the PHA immediately and it is strongly recommended that the landlord contact an extermination professional for an immediate inspection.

PHA Policy
Prior to triggering any responsibilities of the landlord or tenant, the presence of bed bugs in the contract unit must be observed and documented by a County of Los Angeles inspector (as a neutral third-party). If treatment is deemed necessary, a ‘Bed Bug Management Plan Landlord/Tenant Certification Statement’ describing the treatment performed must be provided to the PHA by the landlord within 72 hours of final treatment is required.

Failure to comply with the above requirements is a direct violation of the HAP contract and may result in abatement, termination of the contract and/or suspension of eligibility of the affected unit to participate in the housing programs.

Tenant Roles and Responsibilities
The contract requires the tenant to keep the unit and its premises free from damage.

Therefore, if the presence of bed bugs is suspected, it is the tenant’s responsibility to notify the landlord and the PHA immediately in order to minimize any potential damage to the unit. In addition, it is the responsibility of the tenant to work cooperatively with the landlord and/or extermination professional to ensure the successful elimination of bed bugs. Tenant noncompliance may result in the loss of their voucher.

PHA Policy
Once a unit has been successfully treated for bed bugs, the tenant and landlord/owner will be required to complete and return a ‘Bed Bug Management Plan Landlord/Tenant Certification Statement,’ which will be provided by the landlord. If there is a reoccurrence of bed bug infestation after a successful professional extermination, the tenant may be responsible for the fumigation of the unit.

If the resident notifies the landlord of the presence of bedbugs and the landlord fails to take action within a reasonable period of time, the resident should notify the PHA for assistance. © Copyright 2021 Nan McKay & Associates, Inc.

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PHA Roles and Responsibilities: The PHA will ensure the landlord maintains the unit within HQS guidelines and provide guidance on the resolution of any potential bed bug problems. The PHA will also require all program participants and landlords to disclose at intake, recertification, and inspection any exposures to bed bugs within the last 12-month period.

The above provisions do not supersede existing lease provisions that comply with state and/or local landlord/tenant laws and that have been approved by HUD (where such approval is required). All parties should refer to the property lease executed between the tenant and the O/A, and the property House Rules, for details on owner and resident rights and responsibilities related to infestations and housing physical condition standards. © Copyright 2021 Nan McKay & Associates, Inc.

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PART II: THE INSPECTION PROCESS
8-II.A. OVERVIEW [24 CFR 982.405]
Types of Inspections
The PHA conducts the following types of inspections as needed. Each type of inspection is discussed in the paragraphs that follow.
• Initial Inspections. The PHA conducts initial inspections in response to a request from the family to approve a unit for participation in a program. • Annual/Biennial Inspections. HUD requires the PHA to inspect each unit under lease at least annually or biennially, depending on PHA policy, to confirm that the unit still meets HQS.

The inspection may be conducted in conjunction with the family's annual reexamination but also may be conducted separately.
• Special Inspections. A special inspection may be requested by the owner, the family, or a third party as a result of problems identified with a unit between annual inspections. • Quality Control Inspections. HUD requires that a sample of units be inspected by a supervisor or other qualified individual to evaluate the work of the inspector(s) and to ensure that inspections are performed in compliance with the HQS.

Inspection of PHA-Owned Units [24 CFR 982.352(b)]
The PHA must obtain the services of an independent entity to perform all HQS inspections in cases where an HCV family is receiving assistance in a PHA-owned unit. A PHA-owned unit is defined as a unit that is owned by the PHA that administers the assistance under the consolidated ACC (including a unit owned by an entity substantially controlled by the PHA). The independent agency must communicate the results of each inspection to the family and the PHA. The independent agency must be approved by HUD and may be the unit of general local government for the PHA jurisdiction (unless the PHA is itself the unit of general local government or an agency of such government).

Inspection Costs [Notice PIH 2016-05]
The PHA may not charge the family for unit inspections or reinspections [24 CFR 982.405(e)]. In the case of inspections of PHA-owned units, the PHA may compensate the independent agency from ongoing administrative fee for inspections performed. The PHA and the independent agency may not charge the family any fee or charge for the inspection [24 CFR.982.352(b)].

The PHA may not charge the owner for the inspection of the unit prior to the initial term of the lease or for a first inspection during assisted occupancy of the unit. However, the PHA may charge a reasonable fee to owners for reinspections in two situations: when the owner notifies the PHA that a repair has been made but the deficiency has not been corrected, and when the © Copyright 2021 Nan McKay & Associates, Inc.

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time for repairs has elapsed and the deficiency has not been corrected. Fees may not be imposed for tenant-cause damages, for cases in which the inspector could not gain access to the unit, or for new deficiencies discovered during a reinspection.

The owner may not pass the cost of a reinspection fee to the family. Reinspection fees must be added to the PHA’s administrative fee reserves and may only be used for activities related to the provision of tenant-based assistance.

PHA Policy
The PHA will not charge a fee for failed reinspections.

Remote Video Inspections (RVIs) [Notice PIH 2020-31]
As an alternative to some or all on-site inspections, the PHA may, but is not required to, perform HQS inspections from a remote location using video streaming technology and a proxy at the inspection site. Since there may be some circumstances in which the application of technology provides insufficient information or evidence to allow the PHA to make appropriate determinations about whether a condition violates HQS, Notice PIH 2020-31 requires that if a PHA chooses to implement RVIs, the PHA should have policies and procedures in place to address such limitations.

PHA Policy
The PHA may conduct HQS inspection using RVI.

Notice and Scheduling
The family must allow the PHA to inspect the unit at reasonable times with reasonable notice [24 CFR 982.551(d)].

PHA Policy
Both the family and the owner will be given reasonable notice of all inspections. Except in the case of a life-threatening emergency, reasonable notice is considered to be not less than 48 hours. Inspections may be scheduled between 8:00 a.m. and 5:00 p.m.

Generally, inspections will be conducted on business days only. In the case of a lifethreatening emergency, the PHA will give as much notice as possible, given the nature of the emergency. Notices of inspection will be translated for LEP participants, and will note that availability of appropriate language assistance, in accordance with the PHA’s LEP Plan.

Any required notices sent by the PHA will be addressed to the head of household and must be deliverable to the address of the subsidized apartment. © Copyright 2021 Nan McKay & Associates, Inc.

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Owner and Family Inspection Attendance
HUD permits the PHA to set policy regarding family and owner presence at the time of inspection [HCV GB p. 10-27].

PHA Policy
When a family occupies the unit at the time of inspection an authorized adult must be present for the inspection. The presence of the owner or the owner’s representative is not required.

At initial inspection of a vacant unit, the PHA will inspect the unit. The owner is not required to be present.
8-II.B. INITIAL HQS INSPECTION [24 CFR 982.401(A)]
Initial Inspections [FR Notice 1/18/17]
The PHA may, but is not required to, approve assisted tenancy and start HAP if the unit fails HQS inspection, but only if the deficiencies identified are non-life-threatening. Further, the PHA may, but is not required to, authorize occupancy if a unit passed an alternative inspection in the last 24 months.

PHA Policy
The unit must pass the HQS inspection on or before the effective date of the HAP contract.

The PHA will not rely on alternative inspections and will conduct an HQS inspection for each unit prior to executing a HAP contract with the owner.

Timing of Initial Inspections
HUD requires PHAs with fewer than 1,250 budgeted units to complete the initial inspection, determine whether the unit satisfies HQS, and notify the owner and the family of the determination within 15 days of submission of the Request for Tenancy Approval (RTA). For PHAs with 1,250 or more budgeted units, to the extent practicable such inspection and determination must be completed within 15 days. The 15-day period is suspended for any period during which the unit is not available for inspection [982.305(b)(2)].

PHA Policy
The PHA will complete the initial inspection, determine whether the unit satisfies HQS, and notify the owner and the family of the determination within 15 days of submission of the Request for Tenancy Approval (RTA).
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