Exhibit 5: Income Targeting for Federal Housing Assistance: Recent Changes

On October 21, 1998, President Clinton signed into law the Quality Housing and Work Responsibility Act of 1998 (QHWRA). This law implemented significant reforms to the Nation's public housing and tenant-based Section 8 programs. Among these reforms were changes in Federal requirements for targeting housing assistance. The Act replaced the previous system of Federal preferences with minimum Federal thresholds for targeting and a local planning process through which public housing authorities (PHAs) may develop local preferences with input from a resident advisory board. Specifically, the Act provided for the following:

Public Housing. PHAs are required to reserve at least 40 percent of all public housing units that become available for rent in any given year for families with incomes at or below 30 percent of the local area median income. Consistent with the Act's stated purpose of, "facilitating mixed-income communities and decreasing concentrations of poverty," PHAs are required to develop admissions policies to provide for deconcentration of poverty and income-mixing. In addition, PHAs are prohibited from concentrating very-low-income families in certain buildings or public housing developments.

Tenant-based Section 8 (Vouchers). PHAs and other entities charged with administering the Section 8 tenant-based program are required to reserve at least 75 percent of all vouchers that become available in any given year, either through new appropriations or through "turnover" of existing vouchers, for families with incomes at or below 30 percent of the local area median income.

Project-based Section 8. Owners of buildings that receive assistance under the project-based Section 8 program are required to reserve at least 40 percent of all units that receive Section 8 assistance and that become available for occupancy in any given year for families at or below 30 percent of the local area median income.