FY 2022 Jump in HUD Income Limits Has Potential to Increase Affordable Rental Property Income, Including Inclusionary Housing Project Income.

The recent HUD publication of higher FY 2022 income limits means that LIHTC and Inclusionary Housing projects may be able to increase the marketability of their units to higher income tenants and also increase the rents they charge. 

Pepsi/Splash Blocks Example in Portland

While actual increases could be limited by City of Portland and Oregon Housing and Community Services rent review policies, a recent Portland project in the news, the Pepsi project, shows the impact of HUD median income increases. 

To comply with Portland inclusionary housing requirements this project included some larger size units in addition to studio, 1 and 2 bedroom units. A July 2020 Portland City Council document in support of a tax exemption for the project has the inclusionary housing details. 

With that unit mix if permitted to set rents at the max LIHTC FY 2022 limit, this project could increase its annual income, compared to FY 2021 maximum rents, by $67,380/10.2%. On a per unit basis that's an average rent increase of  $127 month.  

Compared to the maximum LIHTC rents in the July 2020 City Council document, project income would increase by an even greater $98,964/15.7% using the FY 2022 maximum rents. On a per unit basis that's an average rent increase of  $187 per month.

These max rent increase would increase the net income to the project which could be used  to pay for cost increases or quicker payout of deferred developer fees. 

The table below shows the details for this example project and includes a graph showing the max rents allowed per unit for FY 2022 and FY 2021. Note that these are my calculations of maximum incomes and rents for FY 2022. Oregon Housing and Portland Housing Bureau should publish the official increased incomes and rent level soon. 

Courtesy, Oregon Housing Blog.