Rx Kids Funds Being Treated as Income Despite Legal Classification as Gift

*KALAMAZOO, Mich.* — New and expectant mothers receiving cash assistance from Rx Kids are being wrongly charged higher rents at subsidized housing complexes because their payments are being misclassified as income rather than gifts.

The issue has affected families living at Interfaith Homes, Fox Ridge, and Hilltop housing complexes in Kalamazoo County, according to The Housing Advocacy Collective (HAC).

"Parents who received money meant to support their newborns are being wrongly charged higher rent because of it," said Kristie May, reporter with NowKalamazoo.

Rx Kids is a program that provides new and expectant mothers with cash "prescriptions" to help them through the first year of their child's life. Now in its second year, the program gives enrollees $1,500 during pregnancy and $500 per month for the baby's first year.

Housing Advocates Discover Systemic Problem

The Housing Advocacy Collective discovered the issue after mothers they assist reported being required to pay more for their subsidized housing. Property managers at these complexes cited Rx Kids funding as the reason for increased rents.

"Fox Ridge and Hilltop are both managed by the same company, Integrated Management Services," May reported.

The problem stems from how the payments are classified in the housing system. When treated as income, tenants' rents increase because they are required to pay a certain percentage of their income toward rent. However, the temporary funds are legally considered a gift and should not be counted toward income.

Officials Respond with Action Plan

HAC members raised the concern with County Commissioner Tami Rey, who told them she has spoken with Alyssa Stewart of the Kalamazoo Community Foundation to address the issue at Interfaith Homes, requiring refunds and processing changes to prevent it from happening again.

"I will be getting a letter from MAM (Multifamily Asset Management) for Fox Ridge," Stewart said, according to Rey. "MAM is the performance-based contact administrator for HUD project-based contacts."

Stewart added that Kalamazoo Mayor David Anderson and Stewart are working to resolve the issue at other properties.

"Hilltop is on the outreach list, too. I have alerted HRI (Housing Resources Inc.), CoC (Kalamazoo County Continuum of Care), County Housing Director, etc., so everyone is aware this shouldn't be counted and is on the lookout if any other issues pop up," Rey stated.

Public Housing Agency Provides Guidance

Chris Shepard, a housing agent for Pine Grove Housing Service, which operates as the local public housing agency, explained that while the Rx Kids funds should be recorded in the system, funds must be excluded from the tenants' total income amount, so as not to affect tenants' rent calculations.

"Parents receiving Rx Kids funds are invited to attend ongoing information sessions to help them navigate the system and advocate for themselves if they are incorrectly charged," Shepard said.

Support Sessions Available to Help Mothers Navigate System

Information sessions are held on the first and third Monday of each month at Cradle Kalamazoo's downtown office. These sessions help mothers understand how to properly document their Rx Kids payments and present them to property managers.

This story is part of a collaboration between NowKalamazoo and WMUK-FM exploring Kalamazoo County's housing crisis.

Related Coverage

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  • Kalamazoo County achieves record-low infant mortality rates for 2022-2024

The issue highlights broader challenges facing the county's housing system and the need for better coordination between social services agencies and property management companies.