Agenda - Council - 06/28/2016 - Laserfiche WebLink

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'- it r -'— eii• wee. ( col'? M P 4,K ifS Fro AMI AND HOUSING AFFORDABILITY hOLN o K The Area Median Income (AMI) is the midpoint of a region's income distribution - half of households in a region earn more than the median and half earn less than the median. For housing policy, income thresholds set relative to the area median income —such as 50% of the area median income —identify households eligible to live in income -restricted housing units and the affordability of housing units to low-income households. Low-income households Your housing element and implementation program must address affordable housing needs within three levels of affordability: • At or below 30% AMI • Between 31 and 50% AMI • Between 51 and 80% AMI The U.S. Department of Housing and Urban Development (HUD) defines and calculates different levels of AMI for geographic areas across the country by household size. For the Twin Cities region in 2015, HUD has defined the three levels of affordability as:1 Household Size: Extremely Low Income Very Low Income (30% of AMI) (50% of AMI) Low Income (80% of AMI) One -person $18,200 $30,350 $46,100 Two -person $20,800 $34,650 $52,650 Three -person $23,400 $39,000 $59,250 Four -person $26,000 $43,300 $65,800 Five -person $28,410 $46,800 $71,100 Six -person $32,570 $50,250 $76,350 Seven -person $36,730 $53,700 $81,600 Eight -person $40,890 $57,200 $86,900 Thinking about specific jobs helps make this more concrete. For a four -person household with only one wage-earner, positions as home health aides or funeral attendants would provide an income at 30% of AMI; positions as interior designers or bus drivers would provide an income at 50% of AMI; and positions as accountants or police officers would provide an income at 80% of AMI. Having an income below these thresholds makes households eligible for certain housing programs (other social programs use thresholds relative to the federal poverty guidelines). For example, to be eligible for a Housing Choice Voucher, household income must be at or below 50% of AMI; a three -person household with an income up to $39,000 would be eligible for a voucher as would a five -person household with an income up to $46,800. Translating incomes into affordable housing costs These income levels are also a way to assess housing affordability. We say that a housing unit is "affordable at 80% of AMI" if a household whose income is at or below 80% of AMI can live there without spending more than 30% of their income on housing costs. What this means in practice differs for rental and ownership units. Affordable rents for housing units vary by the number of bedrooms in the housing unit. This is because the income limits vary by household size, and the number of bedrooms affects how many people a unit can comfortably house.2 Next page are affordable monthly rents at the different income levels for 2015: Continue to next page