B. Methods to Comply — HUD Handbook 4350.3 REV-1

HUD does not prescribe a method for achieving compliance with the incometargeting requirement. Before determining a specific method to achieve incometargeting requirements, it is a good practice for owners to evaluate the expected admissions based upon the current waiting list.

First, owners should determine whether the composition of a property’s current waiting list enables the owner to achieve the income-targeting requirement by simply following the standard waiting list order with no additional procedures. If the current waiting list includes a significant number of extremely low-income applicants, an owner may be able to meet the 40% target with no additional procedures.

NOTE: In such cases, it is important that owners periodically review the composition of admissions to confirm that the 40% target will be met for that fiscal year. If an owner’s periodic review reveals that admissions of extremely low-income applicants are below the 40% requirement, the owner may need to begin using additional procedures to ensure that the requirement is met by the end of the fiscal year. The owner’s Tenant Selection Plan must clearly describe what method will be used and what admission statistics will trigger implementation of the special selection method.

If an owner determines that following the property’s waiting list in standard chronological order may not (or will not) achieve the admissions necessary to meet the income-targeting requirement, then the owner must implement procedures that will ensure compliance.
- a. To aid in determining the tenant selection procedures that will ensure compliance, HUD recommends that owners examine the volume of unit turnover and applicant admissions for at least the past two years and, based on this information, estimate the likely number of admissions for the coming fiscal year.
- b. Owners may choose any of the following methods, or may develop another method that is consistent with applicable civil rights requirements and does not result in disparate treatment of applicants with respect to any of the protected bases (see Chapter 2). Regardless of the method implemented by the owner, that method must be described in the Tenant Selection Plan.
  - (1) Method 1 – Admit only extremely low-income families until the 40% target is met. In chronological order, owners select eligible applicants from the waiting list whose incomes are at or below the extremely low-income limit to fill the first 40% of expected vacancies in the property. Once this target has been reached, admit applicants in waiting list order.

HUD Occupancy Handbook Chapter 4: Waiting List and Tenant Selection

06/09

4-11

Section 1: Tenant Selection Plan

4350.3 REV-1

(2) Method 2 – Alternate between the first extremely low income applicant on the waiting list and the applicant at the top of the waiting list. To implement this method, owners select the first extremely low-income applicant on the waiting list (which may mean "skipping over” some applicants with higher incomes) for the available unit, and then select the next eligible applicant currently at the top of the waiting list (regardless of income level) for the next available unit. As subsequent units become available, tenant selection continues to alternate between the next extremely low-income applicant and the eligible applicant at the top of the waiting list until the 40% target is reached.

NOTE: It is possible that:

Selection of the "next extremely low-income applicant" may result in selecting the applicant at the top of the waiting list; or
Selection of the "eligible applicant at the top of the waiting list" may result in the selection of an extremely low-income family.
(3) Method 3 - Alternate between the first extremely lowincome applicant on the waiting list and the applicant at the top of the waiting list in groups of 10. In chronological order, owners admit the first 4 extremely low-income families from the waiting list and then admit the next 6 families from the top of the waiting list, regardless of income. This procedure results in 40% or more of admissions being extremely low-income. After filling the first 10 available units, owners again admit the first 4 extremely low-income families on the waiting list and then the next 6 families currently at the top of the waiting list.

NOTE: For more information about meeting income-targeting requirements, and examples of selecting applicants properly from the waiting list, see paragraph 4-25 of this chapter.