§ 960.257 Family income and composition: Annual and interim reexaminations. ( a ) *When PHA is required to conduct reexamination.* ( 1 ) For families who pay an income-based rent, the PHA must conduct a reexamination of family income and composition at least annually and must make appropriate adjustments in the rent after consultation with the family and upon verification of the information.
( 2 ) For families who choose flat rents, the PHA must conduct a reexamination of family composition at least annually, and must conduct a reexamination of family income at least once every three years in accordance with the procedures in § 960.253(f).
( 3 ) For all families who include nonexempt individuals, as defined in § 960.601, the PHA must determine compliance once each twelve months with community service and self-sufficiency requirements in subpart F of this part.
( 4 ) The PHA may use the results of these reexaminations to require the family to move to an appropriate size unit.
( 5 ) For all non-public housing over-income families, the PHA may not conduct an annual reexamination of family income.
( b ) *Interim reexaminations.* ( 1 ) A family may request an interim reexamination of family income or composition because of any changes since the last determination. The PHA must conduct any interim reexamination within a reasonable period of time after the family request or when the PHA becomes aware of an increase in family adjusted income under paragraph (3) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but generally should not be longer than 30 days after changes in income are reported.
( 2 ) The PHA may decline to conduct an interim reexamination of family income if the PHA estimates the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD by notice), or a lower threshold established by the PHA.
( 3 ) The PHA must conduct an interim reexamination of family income when the PHA becomes aware that the family's adjusted income (as defined in § 5.611 of this title) has changed by an amount that the PHA estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except: ( i ) The PHA may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased, except that, based on the PHA's established written policy, the PHA may consider increases in earned income if the PHA has processed an interim reexamination for a decrease in the family's income under paragraph (b)(1) of this section within the same annual or biennial reexamination cycle; and
( ii ) The PHA may choose not to conduct an interim reexamination in the last three months of a family's certification period, in accordance with the PHA's established written policy.
( 4 ) For over-income families in the period of up to six months before their tenancy termination pursuant to § 960.507(d)(2), the PHA must conduct an interim reexamination of family income as otherwise required under this paragraph. However, the resulting income determination will not make the family eligible to remain in the public housing program beyond the period before termination as defined by PHA policy.
( 5 ) The PHA must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition.
( 6 ) *Effective date of rent changes.* ( i ) If the family has reported a change in family income or composition in a timely manner according to the PHA's policies, the PHA must provide the family with 30 days advance notice of any rent increases, and such rent increases will be effective the first day of the month beginning after the end of that 30-day period. Rent decreases will be effective on the first day of the first month after the date of the actual change leading to the interim reexamination of family income.
( ii ) If the family has failed to report a change in family income or composition in a timely manner according to the PHA's policies, PHAs must implement any resulting rent increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting rent decrease must be implemented no later than the first rent period following completion of the reexamination. However, a PHA may apply rent decreases retroactively at the discretion of the PHA, in accordance with the conditions established by the PHA in written policy and subject to paragraph (b)(6)(iii) of this section.
( iii ) A retroactive rent decrease may not be applied by the PHA prior to the later of the first of the month following: ( A ) The date of the change leading to the interim reexamination of family income; or
( B ) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination).
( c ) *Streamlined income determination* — ( 1 ) *General.* A PHA may elect to apply a streamlined income determination to families receiving fixed income, as described in paragraph (c)(3) of this section.
( 2 ) *Definition of “fixed income”.* For purposes of this section, “fixed income” means periodic payments at reasonably predictable levels from one or more of the following sources: ( i ) Social Security, Supplemental Security Income, Supplemental Disability Insurance.
( ii ) Federal, state, local, or private pension plans.
( iii ) Annuities or other retirement benefit programs, insurance policies, disability or death benefits, or other similar types of periodic receipts.
( iv ) Any other source of income subject to adjustment by a verifiable COLA or current rate of interest.
( 3 ) *Method of streamlined income determination.* A PHA using the streamlined income determination must adjust a family's income according to the percentage of a family's unadjusted income that is from fixed income. ( i ) When 90 percent or more of a family's unadjusted income consists of fixed income, PHAs using streamlined income determinations must apply a COLA or COLAs to the family's sources of fixed income, provided that the family certifies both that 90 percent or more of their unadjusted income is fixed income and that their sources of fixed income have not changed from the previous year. For non-fixed income, the PHA is not required to make adjustments pursuant to paragraph (a) of this section.
( ii ) When less than 90 percent of a family's unadjusted income consists of fixed income, PHAs using streamlined income determinations must apply a COLA to each of the family's sources of fixed income individually. The PHA must determine all other income pursuant to paragraph (a) of this section.
( 4 ) *COLA rate applied by PHAs.* PHAs using streamlined income determinations must adjust a family's fixed income using a COLA or current interest rate that applies to each specific source of fixed income and is available from a public source or through tenant-provided, third-party-generated documentation. If no public verification or tenant-provided documentation is available, then the owner must obtain third-party verification of the income amounts in order to calculate the change in income for the source.
( 5 ) *Triennial verification.* For any income determined pursuant to a streamlined income determination, a PHA must obtain third-party verification of all income amounts every 3 years.
( d ) *PHA reexamination policies.* The PHA must adopt admission and continued occupancy policies concerning conduct of annual and interim reexaminations in accordance with this section, and shall conduct reexaminations in accordance with such policies. The PHA reexamination policies must be in accordance with the PHA plan.
( e ) Reviews of family income under this section are subject to the provisions in section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, as amended (42 U.S.C. 3544).
( f ) *De minimis errors.* The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income varies from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income).
(i) The PHA must take any corrective action necessary to credit or repay a family if the family has been overcharged for their rent as a result of an error (including a de minimis error) in the income determination. Families will not be required to repay the PHA in instances where the PHA has miscalculated income resulting in a family being undercharged for rent or family share. (ii) HUD may revise the amount of de minimis error in this paragraph (f) through a rulemaking published in the Federal Register for public comment. [65 FR 16726, Mar. 29, 2000, as amended at 81 FR 12373, Mar. 8, 2016; 82 FR 58340, Dec. 12, 2017; 85 FR 27139, May 7, 2020; 88 FR 9670, Feb. 14, 2023; 88 FR 9670, Feb. 14, 2023]