The tenant pays 30% of their income, between 50% of AMI and 80% of AMI. The landlord would rather have a tenant with 80% AMI income, and the tenant who is at 50% of AMI would like to rent that apartment for the cheap rent they'd get. +

So landlords are incentivized to pick the tenant with the highest income, and turn a blind eye when their actual income exceeds 80% of AMI and they shouldn't be eligible. They want the tenant with the 80%+ AMI income, and they want to not notice the extra income. +

The tenant with the 50% AMI income who wants that apartment is incentivized to boost their income temporarily (e.g. by taking on another job) only to let it revert as soon as they sign the lease.

Consider a couple with children. Very likely at this income level, if the second parent takes a job, their entire income and more goes to childcare. BUT—they take the job, their household income goes to 79% of AMI, they get the apartment, and then they quit the job the next day.

This also creates deep uncertainty for developers and owners. If you don't know how much rent you are going to collect each year, it's very hard to financially plan for building maintenance or capital improvements; so you're going to try very hard to find upwardly-mobile tenants at 79% of AMI.

Exactly. It's very bad.