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Income not keeping pace with rent for affordable housing

Posted: 12:03 PM, Jun 29, 2018
Updated: 2018-07-02 19:17:26Z

OCEANSIDE, Calif. (KGTV) - $64 a month: That’s the difference between a San Diego couple having a roof over their heads or being out on the street. They live in affordable housing and the rent just increased.

“I was like all excited to live here and then it’s just like a big drop, you have to leave,” said Carolyn Moore.

Moore and her husband moved into their Oceanside apartment in December. They signed a one-year lease paying $992 a month. She tells Team 10 their combined income is only around $1,500 a month.

At the end of April, they received a notice from the apartment management company stating rent was going up to $1056.  The note said it was due to a change in the area median gross income. It explained that “each year the government publishes its area median gross income statistics, which are used to determine the maximum allowable rent for tax credit units. Because this area’s median gross income this results in rent being increased or decreased per the published rates.”

Team 10 discovered the Area Median Income in San Diego is relatively high, and that number drives the rental rates for affordable housing.  The increase in AMI meant Carolyn’s rent was going up.

"We can't afford to stay here,” she said. “We're going to have to move out, put our stuff in storage and go from hotel to hotel.”

Moore told Team 10 investigator Adam Racusin there is there a possibility she and her husband will end up on the street.

According to the Department of Housing and Urban Development website, “HUD sets income limits that determine eligibility for assisted housing programs including the Public Housing, Section 8 project-based, Section 8 Housing Choice Voucher, Section 202 housing for the elderly, and Section 811 housing for persons with disabilities programs. HUD develops income limits based on Median Family Income estimates and Fair Market Rent area definitions for each metropolitan area, parts of some metropolitan areas, and each non-metropolitan county.”

The developer tells 10News the AMI didn’t change from 2010 to 2015, meaning rents for people in affordable housing didn’t change. As the recession ended, AMI increased.

Moore gets Social Security and her income isn't keeping pace.

The lease she and her husband signed includes a provision that if the Area Median Income or AMI rises, then her rent will increase.

The developer told 10News due to income restrictions mandated by the financing structure of affordable housing, developers of affordable housing may adjust rental rates up – or down - upon HUD’s release of the updated Area Median Income and upon the publishing of the utility allowance by the local governing agency.

Their ability to incrementally raise rents is critical to underwriting affordable housing developments.

Increasing or decreasing the rent based on rates the government publishes yearly is often a provision in the loan documents and is statutorily required in many cases depending on the financing source.

"When we see the cost of living increase and the income that a family has to be able to pay that cost of living not increase, people get caught in the middle,” said Greg Anglea.

Anglea is the Chief Executive Officer of Interfaith Community Services, an organization that helps people in financial need get back on their feet.

Their services include homeless prevention, bridge housing, and permanent housing.

People on fixed incomes struggling to keep up with the median rate across the county is something he’s seen before.

"We really need to be creating more entry-level housing,” Anglea said.

Moore tells 10News she put her 30 days' notice in but isn’t sure where they’ll end up.

“I try to be strong inside, but inside it's just like, oh man here we go again,” she said.

Area median income is released around March every year, and the utility allowance is released around June. 

Together they can raise and lower the amount someone pays. Rents can go down if the cost of gas and electricity goes up, which would then decrease the rent because affordable housing developments must provide tenants with a utility allowance, which is deducted from the rent.

For more information on originations that help bridge the gap:

Interfaith services

Brother Benno