Section K: Calculating Resident Rent

Information by State  Print version   Shp Deskguide Contents   Introduction   Detailed Table of Contents   A. Program Goals   B. Eligible Participants   C. Program Components   D. Eligible Activities and Match   E. Reserved   F. Important Dates   G. Conditional Approval and Program Cycle   H. Site Control Requirements   I. Grantee Responsibilities   J. Reserved for Project Financing   K. Calculating Resident Rents   L. Reserved   M. Reserved for Financial Management   N. Annual Progress Reports   O. Reserved for Compliance Monitoring   P. Technical Assistance   Q. Project Renewals   R. Grant Amendments   S. Grant Extensions   T - X Reserved   Y. Spending and Recaptures   Z. Reserved for Closeouts

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Shows how to calculate rental payments using a worksheet   Specifies items that must be included in determining annual income   Specifies items that must be excluded from determining annual income   Specifies allowable adjustments to income   Discusses general rent topics

Want an Excel Worksheet to calculate the rent?

Definition of Resident Rent

Resident Rent is the higher of:

1. 30 percent of monthly adjusted income;
   
2. 10 percent of monthly gross income;
   
3. Welfare rent (if applicable in your state; if unsure, check with the HUD Field Office)

Grantees are not required to charge participants any rent. However, if the grantee decides to charge rent, the worksheet will take your through the steps to arrive at the maximum rent. Use the following worksheet to determine resident rent:

RESIDENT RENT CALCULATION WORKSHEET

Annual income includes:

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 full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts, including lump sum payment for delayed start of a periodic payment;
   
3. Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay;
   
4. Welfare assistance. Welfare or other payments to families or individuals, based on need, that are made under program funded, separately or jointly, by Federal, State or local governments (e.g, Social Security Income (SSI) and general assistance available through state welfare programs)
   
5. Periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling;
   
6. Net income from the operation of a business or profession;
   
7. Interest, dividends, and other net income of any kind from real and personal property;
   
8. All regular pay, special pay and allowances of a member of the Armed Forces, except special hostile fire pay.

Income That Must Be Excluded

Annual income does not include:

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 individuals 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;
   
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. 813.102;
   
6. The full amount of student assistance paid directly to the student or to the educational institution;
   
7. Amounts received under training programs funded by HUD;
   
8. Amounts received by a disabled person that are disregarded for a limited time for purposes of SSI income eligibility and benefits because they are set aside for use under a Plan for Achieving Self-Support (PASS); or
   
9. Amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocked expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program;
   
10. 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 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, and resident initiatives coordination. No resident may receive more than one such stipend during the same period of time;
11. Compensation from state or local employment training programs 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 a limited period as determined in advance;
    
12. Temporary, non-recurring or sporadic income (including gifts);
    
13. For all initial determinations and reexaminations of income carried out on or after April 23, 1993, 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;
    
14. Earnings in excess of $480 for each full time student 18 years old or older (excluding the head of household and spouse);
    
15. Adoption assistance payments in excess of $480 per adopted child;
    
16. Deferred periodic payments of SSI income and social security benefits;
    
17. 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;
    
18. Amounts paid by a State agency to a family with a developmentally disabled family member living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home;
    
19. 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 included assistance under the U.S. Housing Act of 1937:
    (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) Payments to volunteers under the Domestic Volunteer Service Act of 1973 (42 U.S.C.5044, 5058);
    (c) Payments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626);
    (d) Income derived from certain submarginal land of the United States that is held in t rust for certain Indian tribes (25 U.S.C. 459e);
    (e) Payments or allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program (42 U.S.C. 8624(f));
    (f) Payments received under programs funded in whole or in part under the Job Training Partnership Act (29 U.S.C. 1552(b));
    (g) Income derived from the disposition of funds of the Grand River Band of Ottawa Indians (Public Law 94-540, 90 Statute 2503-2504);
    (h) The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims (25 U.S.C. 1407-1408) or from funds held in trust for an Indian tribe by the Secretary of Interior (25 U.S.C. 117);
    (i) Scholarships funded under Title IV of the Higher Education Act of 1965 including awards under the Federal work-study program or under the Bureau of Indian Affairs student assistance programs that are made available to cover the costs of tuition, fees, books, equipment, materials, supplies, transportation, and miscellaneous personal expenses of a student at an educational institution (20 U.S.C.1087uu);
    (j) Payments received from programs funded under Title V of the Older Americans Act of 1965 (U.S.C. 3056(f));
    (k) Payments received after January 1, 1989, from the Agent Orange Settlement Fund or any other fund established pursuant to the settlement in the In Re Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.); and
    (l) Payments received under Maine Indian Claims Settlement Act of 1980 (Pub.L. 96-420, 94 Statute 1785);
    (m) Earned income tax credit refund payments received from the Internal Revenue Service on or after January 1, 1991. Payments may be received in a resident's regular pay or as a single sum payment;
    (n) Payments received as AmeriCorps Living Allowances (29 U.S.C. Sec.1552);
    (o) Payments received under WIC-Supplemental Food Program for Women, Infants, and Children;
    (p) Payments received under the National School Lunch Program (42 U.S.C. 175-176);
    (q) Payments received under the Child Nutrition Act (42 U.S.C. 1771-1778);
    (r) Payments received under the Child Care Block Grant Act of 1990.

Adjustments to Income

	Dependent Allowance: $480 must be deducted for each dependent. Dependents include household members who are under 18, handicapped, disabled, or full-time students, but not any of the following: the family head, spouse, or foster children.
	Child Care Allowance: Reasonable child care expenses anticipated during the period for children 12 and under that enable a household member to work or pursue further education are deducted. The amount deducted for child care to enable a person to work may not exceed the amount of income received from such work. In addition, child care expenses may not be deducted if the individual is reimbursed for these expenses.
	Disabled Assistance Allowance: The disabled assistance allowance covers reasonable expenses anticipated during the period for attendant care (provided by non-household member) and/or auxiliary apparatus for any handicapped or disabled household member that enables either that individual or another household member to work. The amount of expenses that exceeds three percent of annual gross income is deducted, provided the resident is not reimbursed for the expenses and the expenses do not exceed the amount earned by adult household members as a result of the disabled assistance.
	Medical Expenses Allowance: The amount that may be deducted for anticipated medical expenses not covered by insurance or unreimbursed, generally equals the amount by which the sum of disabled assistance expenses, if any, as described above, and medical expenses exceeds three percent of annual income.
	Elderly/Disabled Family Allowance: A $400 per elderly or disabled family allowance is provided to any family whose head of household, spouse, or sole member is at least 62 years old or is handicapped or disabled.

General Topics Regarding Resident Rent

Review of Income: In order to determine the correct rent payment, residents' income must be reviewed. Their income must be reexamined at least annually. In addition, if there is a change in family composition (e.g., birth of a child) or a decrease in the resident's income during the year, an interim reexamination may be requested by the resident and the resident rent adjusted accordingly. Residents who receive an increase in income need not have their rent increased until the next scheduled (annual) reexamination. Residents must agree to supply such certification, release, information, or documentation as the grantee judges necessary to determine the resident's income. Self-declaration may be used only if there is no other means of verification available.

Maximum or a minimum rent that can be charged: The United States Housing Act of 1937 states that resident rent must be the highest of either 30 percent of monthly adjusted income, 10 percent of monthly income, or, under certain circumstances, a locally-designated portion of public assistance. This standard sets an exact rent; there is no maximum or minimum per se. See section 1 (Purpose) for the SHP exceptions. However, see section 3.a.(4) for information on P.L. No. 104-99.

Use of income earned through participation in a training program: Income earned through training programs should be excluded if the training program is: funded by HUD (including training provided by HUD grantees and sub-grantees using HUD program funds); is funded through the Job Training Partnership Act (JTPA), including AmeriCorps Living Allowances; or is funded by State or local employment training programs.

Distinguishing between employment that is part of a training program and regular employment: Employment-related activities are considered to be training rather than employment if the work activity is of a time-limited nature and there is a curriculum of activities with discrete goals related to a participant's skill development and employability. Examples of such activities may include on-the-job training for maintenance work, data entry, or food preparation.

Utility Payments: In some circumstances the cost of utilities is not included in the resident rent but is the responsibility of the resident. This usually occurs for those living in units that are individually metered, and residents receive bills directly from the utility company. In such circumstances, the resident's rent would equal the resident's required rent payment less an allowance for reasonable utility consumption. Do not include the cost of telephone service as a utility for this purpose. If reasonable utility expenses alone exceed the amount the resident is required to pay for both shelter and utilities, the resident must be reimbursed for the difference. The attached worksheet reflects this calculation.

Reasonable utility consumption: Local public housing agencies (PHAs) maintain a schedule of utility allowances by housing type for the Section 8 program. To determine the amount to allow for a reasonable amount of utility consumption given a particular type and unit size of housing, the local PHA should be contacted for the schedule of utility allowances.

Eligible child care expenses: Child care expenses can be deducted in full given the following conditions: the child or children are 12 years old and under; the resident is employed or enrolled in school while the dependent is receiving care; the amount deducted as child care expenses is necessary for the resident to work or attend school and the amount necessary for the resident to work does not exceed the amount earned while working; and the resident is not reimbursed for this expense.

Child care payments through program fees: If the amount paid through program fees is for eligible child care expenses, then the amount paid should be deducted from income.

Seasonal employment income: Unless the income is earned by family members younger than 18 years of age, seasonal income is counted just like other wages and salaries. Seasonal income includes, but is not limited to, holiday employment, summer employment, and seasonal farm work. "Temporary, non-recurring income" is income that is not expected to be regularly available in the future. An example of "temporary, non-recurring income" is income earned by census workers who helped take the 1990 census.

Fees for food and services: Participants in programs covered in this document may be charged fees for food and other services in addition to rent, but the fees should be reasonable and not conflict with the goal of helping residents achieve the highest level of independent living possible.

Sliding scale fees: Fees may be based either on a sliding scale according to the resident's income or on a fixed basis as long as those fees are reasonable to the income of the resident and in relation to the services provided.

Fees applied to some residents but not others: If there is a reasonable basis to charge only some residents, such as services that apply only to some residents, then fees can be selectively applied. However, in most cases if a fee is charged, it would be applied to all residents.

Saving a portion of the resident's income: Federal regulations do not prohibit recipients from instituting mandatory savings programs. However, such programs, if adopted, should be applied to all residents. In addition, recipients should be aware that savings plans may result in asset levels that could jeopardize residents' eligibility for benefits such as AFDC, SSI and general assistance. Recipients may want to consult with their local public welfare office to discuss ways to implement savings programs without jeopardizing benefits available to their residents.

Medical expense allowance: Medical expenses can only be deducted if the head of household, spouse or sole member is at least 62 years of age, handicapped or disabled. In addition, only medical expenses in excess of 3 percent of annual income that are not reimbursed may be deducted. The amount deducted depends on the amount of handicapped assistance expenses as described in the Adjustments section.

Typical handicapped assistance expenses: Typical handicapped assistance expenses include specially equipping an automobile so that a household member can drive to work or paying for in-home attendant care of a handicapped child so that an adult member can work.

Earned income tax credits: The amount of income included in the residents' pay that is attributed to an earned income tax credit will be listed separately on their pay stubs. It will be the same amount in each check.

Training: If the training is provided using funds available through a grant, it is considered HUD-funded training, and income received from such training may not be counted as income when calculating resident rent payments.

Resident rent be used to pay expenses other than operating or leasing costs: Rental income may be used for expenses other than operating or leasing costs at the recipient's discretion. For example, the residents' rent could be saved to be used to help them make the transition to permanent housing and greater independence.

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