In order to be deemed “affordable,” the rental or purchase price of a housing unit must be accessible to people at or below a certain income. Each year, the U.S. Department of Housing and Urban Development (HUD) releases income limits – broken down by state, county and city – for the entire country. People who fall at or below those limits are qualified for affordable housing.
Because the cost of living and, consequently, pay scales vary widely from place to place, HUD sets affordable housing income limits based on the Area Median Income (AMI) or average income for a given location. That’s why income limits for a family of four in Los Angeles County, California range from $25,600 to $68,300 while they range from $20,850 to $55,600 in Lancaster County, Nebraska.
For a military family, qualifying for affordable housing can be difficult, even when its actual income is low. While a military person’s salary alone could qualify his family, the formula used to determine eligibility also includes the service member’s Basic Allowance for Housing (BAH). Like HUD’s income limits, the military’s BAH is calculated by region. So low-ranking military personnel stationed in San Francisco, California earn a BAH of $2300, while the same personnel would earn just $819 if they were stationed in Sioux City, Iowa. Inclusion of the BAH often pushes a service member’s income above the threshold, consequently disqualifying him for affordable housing.
In an effort to correct this, Congress is considering a bill that would adjust the formula used to determine a military family’s eligibility. Called the Military Families Affordable Homes Act, it would eliminate the BAH from the formula. This would be a positive step for both service members and affordable housing developers.
A limited version of the formula has already been passed, and applies to only a few military installations and surrounding communities. This new bill would expand the formula to include all military installations in the United States, and extend the provisions through 2014, at which time they would have to be voted on and approved again.
The bill specifically addresses requirements laid out under Section 42 of the IRS Code, which deals with tax credits for affordable housing development and the rental and income limits required for a housing unit to be deemed “affordable.” The changes proposed in the Military Families Affordable Homes Act would enable more service members to qualify for low- or moderate-income housing, thereby increasing market demand and making affordable housing projects more financially viable in parts of the country where military families reside.
