Excluding BAH When Determining Income Would Extend Eligibility to More Servicemembers, Assuming No Additional Household Income

Assuming that the primary components of military pay were the only  sources of servicemembers’ household incomes, excluding BAH payments  from income when determining servicemembers’ eligibility for federal  rental housing programs would have substantially increased the percentage  that would have been eligible to apply for the programs as of December  2005. Specifically, most junior enlisted members would have been eligible  for the programs, as would have much smaller percentages of senior  servicemembers. Most Junior Enlisted Members and Some Senior Members Would Have Been Eligible if Military Pay Were Their Sole Source of Income

Assuming that the primary components of servicemembers’ military pay  were their only sources of household income in 2005, we found that by  excluding BAH from income determinations, 19.9 percent of  servicemembers of all grades would have been eligible for federal rental  housing programs that used an income limit of 50 percent of AMI, compared with less than 1 percent of servicemembers with BAH included. The same was true even if BAH were excluded from income  determinations. DOD officials said that servicemembers would be unlikely to need federal  rental housing programs because BAH rates cover median local housing  costs and would adjust annually to reflect any increases in market rents  that resulted from increased demand for housing near growing  installations. Yet, some community officials said that the LIHTC program  could be used to build more affordable housing if more servicemembers  were eligible. However, states would have to award tax credits to projects  in these communities, and housing market factors—such as the financial  feasibility of building market-rate units with rents that low-ranking  servicemembers could afford—could affect developers’ interest in using  the LIHTC program. Furthermore, although HUD and USDA programs  could help some eligible servicemembers rent existing units, the programs  are not entitlements; the limited availability of this rental assistance may  preclude servicemembers from using the programs. Although these data, which pertain to personnel already located at these  installations as of December 2005, do not indicate how many incoming  personnel might be eligible to live in tax-credit units, they suggest that  substantial percentages of those at the rural installations might become  eligible if BAH were excluded from income determinations. Objectives, Scope, and Methodology

	Objectives

Our objectives were to determine (1) how excluding the Basic Allowance  for Housing (BAH) from income determinations would have affected the  eligibility of servicemembers receiving BAH as of December 2005 and (2)  programmatic and market factors that could affect eligible  servicemembers’ participation in the programs in selected communities  gaining military personnel. Scope and Methodology

The federal rental housing programs in our scope include the Department  of Housing and Urban Development’s (HUD) public housing, Housing  Choice Voucher, and project-based Section 8 programs; the Department of  Agriculture’s (USDA) Section 515 Rural Rental Housing Loans and Section  521 Rural Rental Assistance programs; and the Low-Income Housing Tax  Credit (LIHTC) and tax-exempt multifamily housing bond programs, which  are jointly administered by the Internal Revenue Service (IRS) of the  Department of the Treasury (Treasury) and the states.
Why GAO Did This Study

Although the Department of Defense (DOD) pays active-duty servicemembers who do not live in military housing a Basic Allowance for Housing (BAH) to help them afford private market residences, expected growth at some military installations has raised concerns about whether nearby communities will have enough affordable rental housing for incoming personnel. In response to a congressional mandate, GAO assessed (1) how excluding BAH would affect servicemembers' eligibility to apply for federal rental housing programs and (2) factors that could affect their use of the programs in selected communities gaining military personnel. GAO compared servicemembers' eligibility for the programs as of December 2005 by including and excluding BAH from income determinations and examined factors affecting potential program use near four growing military installations.

What GAO Found

Excluding BAH from income determinations for federal rental housing programs would have substantially increased the percentage of servicemembers eligible to apply for the programs as of December 2005, assuming military pay was their only income. To be eligible to apply for rental assistance programs of the Departments of Housing and Urban Development (HUD) and Agriculture (USDA), or to live in units produced by the Internal Revenue Service's (IRS) Low-Income Housing Tax Credit program, households must have incomes at or below a specific limit, generally 50 percent or 60 percent of the median household income for their area. At the 50 percent income limit, 20 percent of servicemembers who received BAH would have been eligible if BAH were excluded from income determinations, compared with 1 percent with BAH included. Most junior enlisted members would have been eligible if BAH were excluded, as would have small percentages of senior personnel. However, at all levels, many would not have been eligible if their households had even modest income from other sources. Agency and community officials cited factors that could limit the role of federal programs in building housing or helping servicemembers afford existing units near four installations that GAO examined. DOD officials said that servicemembers would be unlikely to need the programs because BAH payments provide for the median cost of market-rate housing. Some community officials said the tax-credit program, which spurs housing production, could be useful if more servicemembers qualified. But developers would have to compete for tax credits, and market factors--such as the financial feasibility of building units that junior enlisted members could afford--could limit their interest. The HUD and USDA programs might help some servicemembers rent existing units, but--because the programs are not entitlements--servicemembers could face lengthy waits, and eligible civilians might wait longer for assistance.