Resident's Pre-Housing Benefit Child Support Payments Excluded from Income Calculations

Facts: A Section 8 resident challenged the local PHA’s calculation of her income in court. In 2013, the resident received a substantial lump-sum payment of child support arrears from her children’s father. The PHA treated the lump-sum payment as income in 2013 and calculated a repayment amount it claimed it was owed by the resident. The resident used the lump-sum payment to pay the PHA. She appealed the repayment amount to an administrative hearing officer, who upheld the PHA’s calculations and repayment plan.

At the time the resident was awarded Section 8 housing, her children’s father was $10,572 in arrears for child support payments. He continued to not meet his child support obligations, and the resident notified the PHA of the absence of income resulting from his failure to pay.

In July 2012, the father began to pay child support, and the resident notified the PHA of the resulting change in income. In July 2013, the father made a lump-sum payment of $7,302 toward his child support arrears. This payment was applied to the past due amount that accrued prior to September 2009, when the resident began receiving housing benefits. When she received the lump-sum payment, the resident notified the PHA in writing of the payment.

The resident asked the court to review the administrative finding and the PHA’s calculations. A trial court found that the PHA’s repayment calculations were proper and dismissed the resident’s complaint. The resident appealed.

Ruling: A New Jersey court ruled in the resident’s favor.

Reasoning: The court recognized that for purposes of calculating rental assistance under HUD guidelines, “annual income includes, but is not limited to . . . [p]eriodic and determinable allowances, such as alimony and child support payments, and regular contributions . . . received from organizations or from persons not residing in the dwelling.” However, the court pointed out that even if child support payments generally constitute income, it doesn’t follow that a PHA should calculate it as income in the year the tenant received it. The court pointed to a Dec. 21, 1989, HUD directive to the Kitsap County Consolidated Housing Authority to support its position.

According to the court, the lump-sum payment didn’t constitute income in the year the resident received it. Without the aid of child support payments from the children’s father, the resident had supported herself and her children using her own resources prior to receiving rental housing assistance in September 2009. Before September 2009, the PHA had no claim on these payments because she didn’t receive rental assistance. Therefore, the court saw no reason why the PHA may now assert a claim on them because a disability award enabled the children’s father to make good on his child support arrearage in 2013, after the resident was receiving rental assistance.

• Gonzalez v. Brick Housing Authority, April 2014