Every inclusionary housing program requires that tenants earn less than the target income threshold at the time that they apply for an inclusionary rental unit. Many also require annual income recertification. In these programs, property managers must collect income documentation, such as pay stubs and tax returns, from the tenants occupying affordable units and verify that they earn less than the program maximum income.

What happens when the annual income recertification reveals that a tenant is now earning too much to qualify for an affordable unit? A small number of programs require property owners to terminate the tenancy of these tenants and replace them with income-qualified households. Another approach in mixed-income buildings is to allow the property owner to simply fill the next available unit with an income-eligible household. The previously affordable unit would become a market-rate unit, and one of the previously market-rate units would be designated as affordable. This approach is not always practical but it can provide flexibility.

San Francisco, California

San Francisco requires property managers to annually recertify tenant incomes, but the city’s policy allows tenants’ incomes to increase significantly without jeopardizing their continued eligibility for affordable housing. A tenant’s income is allowed to increase up to 200 percent of the income cap that was in place when he or she initially qualified. For example, a tenant that moves into a unit that is restricted to households earning no more than 55 percent of AMI can later increase his or her income up to no more than 110 percent of AMI without consequence. If the increase is more, the tenant must relocate at the end of the current lease term.