Family living in public housing makes half a million a year, and HUD's OK with that

·Homes Editor
A public housing complex in New York City. (Photo by Spencer Platt/Getty Images)
A public housing complex in New York City. (Photo by Spencer Platt/Getty Images)

In New York, there's a family of four that makes half a million dollars a year — and lives in public housing at $1,574 a month.

In Los Angeles, one family of five makes $205,000 a year and pays $1,100 in rent for subsidized housing. The family was admitted to the program in 1974 and has been overincome since at least 2011.

How can this be?

AMOUNT BY WHICH OVERINCOME FAMILIES EXCEEDED LIMITS.
AMOUNT BY WHICH OVERINCOME FAMILIES EXCEEDED LIMITS.

It turns out that there's a low-income threshold to  be admitted to public housing. But once you're in, you're in. You don't get kicked out if your income grows.

The watchdog for the Housing and Urban Development Department found that about 25,000 families in public housing now earn more than the income limits for program eligibility, at a HUD expense of more than $100 million a year. Nearly half of them exceed the limits by more than $10,000 a year. Eighteen thousand of the overincome families had been overincome for more than a year.

In a sample of 15 public housing authorities, about 12,500 families were overincome while 580,000 eligible families awaited a vacancy.

OVERINCOME FAMILIES VS. WAIT-LIST FAMILIES.
OVERINCOME FAMILIES VS. WAIT-LIST FAMILIES.

HUD doesn't necessarily see any problem with this (although the watchdog does).

In the New York case, the New York Housing Authority told the inspector general that it didn't evict the family earning $497,911 from its three-bedroom unit "because its policy does not require it to terminate the tenancy or evict families solely because they are overincome. The Authority believes that allowing overincome families to reside in public housing is beneficial because it shows that participation in the public housing program can help families achieve a more stable life and the average rent paid by overincome families is greater than that paid by other low income families."

In the L.A. case, the Housing Authority of the City of Los Angeles told the watchdog it didn't evict the family from its four-bedroom unit "because its policy does not require it to evict overincome families because HUD regulations don’t require it. The Authority claimed that evicting overincome families would work against HUD’s efforts to deconcentrate poverty in public housing developments."

Nationwide, about 1.1 million families live in HUD public housing units.

Click here to read the inspector general's full report (PDF).

(h/t Washington Post)

Points of clarification, added Tuesday night, Aug. 18, 2015: A number of commenters have asked about a few details. Here are our answers:

• The inspector general's report applies to HUD's 1.1 million public housing units, which are generally owned by one of the nation's 3,000-plus housing authorities. It does not address the housing voucher system, Section 8.

• According to the report by the Office of the Inspector General, HUD-assisted families can choose each year whether they pay (a) an income-based rent or (b) a flat rent. HUD revised its flat-rent policy in May 2014, requiring housing authorities to set rents at 80 percent or more of applicable fair-market rent, and to implement them by October 2014.

• The family in L.A. was paying a flat rent. The New York family was paying an income-based rent that had a ceiling (which the family hit; therefore, the family was paying the maximum required). That ceiling was essentially abolished in October 2014, the inspector general said. So this year, the New York family might choose the flat, market-based rent.

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