subsidized housing advanced topics training

Advanced Topics: Subsidized

Housing

Housing Right to

Counsel Project

April 20, 2017

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mailto:[email protected]

Main Attributes of Largest Programs

• Income-based rent Roughly 30% of tenant’s income

• Recertification is required Every two years for public housing Every two or three years for HCVP Every year for site-based section 8 Tenants must report change in income and household composition Also requirement for interim recertification – for certain changes in

between regular recertifications• Occupancy restrictions • Different transfer rights, depending on program

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Public HousingSite-Based Section 8Section 8 Voucher (Housing Choice

Voucher Program - HCVP)

Public Housing• D.C. Housing Authority (DCHA) owns and typically manages property

▫ Private managers at some DCHA-owned sites

▫ Also private managers at redeveloped sites (e.g. Hope VI)

• HUD provides funding to DCHA

▫ Large annual payments – no concept of contract rent per se

• Governed by federal and local regulations – 24 C.F.R. parts 960, 963 to 966, 970 to 972, 14 D.C.M.R. chs. 60-65, 74

• Standard lease (available on DCHA website)

• Only semi-portable – tenants have right to transfer to different public housing units

• Recertification with DCHA site manager at rental office

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Site-Based (Project-Based) Sec. 8• Subsidy tied to property and unit

• Owned and operated by private landlords, who contract with HUD

▫ Each unit has a contract rent

▫ Tenant pays income-based rent, HUD pays balance to landlord

• Governed by federal regulations only (no local regulations)

▫ Best guidance is found in Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs (available online at https://www.hud.gov/hudclips/)

• Slightly portable – typically can only transfer within same property, with right to transfer between properties of same landlord in some circumstances

• Recertification on-site with property manager at rental office

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Sec. 8 Voucher (Housing Choice

Voucher Program)

• Tenant contracts with private landlord, which has contract with DCHA - allows tenant to choose among private landlords

▫ Lease between tenant and landlord

▫ Housing Assistance Payments (HAP) contract between DCHA and landlord

• Vouchers administered by DCHA

• Governed by federal and local regulations –24 C.F.R. ch. 982, 14 D.C.M.R. chs. 49, 51-56, 58-59, 74, 76, 85, 89, 92

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Sec. 8 Voucher (Housing Choice

Voucher Program)

• Portable – can use at any property in DC (or throughout U.S. unless local dollars), as long as it falls within maximum rent levels set by DCHA

• Recertification with DCHA (1133 N. Capitol St. NE), not with landlord

• Many obstacles to voucher utilization

▫ Maximum rents reach only half of D.C. neighborhoods

▫ Source of income discrimination (refusing to accept vouchers versus other forms of payment) still exists, though illegal in D.C.

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Other Programs• Local Rent Supplement Program

▫ Parallel to HCVP but local dollars (usable in D.C. only)

▫ Local regulations 14 D.C.M.R., ch. 95 (but essentially points to HCVP rules and regulations)

• Department of Behavioral Health “Home First” Program

▫ May be administered through private contractors like Green Door

▫ Local regulations 22A D.C.M.R., ch. 2200

• Rapid Re-Housing/ Family Re-Housing Stabilization Program

▫ Generally limited to one year of assistance with limited extensions

▫ Local regulations 29 D.C.M.R., ch. 78

• Veterans Affairs Supportive Housing (VASH)

▫ Supportive services plus housing for veterans, administered by DCHA but with link to VA

▫ Federal HCVP regulations apply but federal notices have additional guidance

• Low-Income Housing Tax Credit Program

▫ Below market rent, but not income-based, with annual recertification

▫ Federal statute and regulations, 26 U.S.C. § 42, 26 C.F.R. § 1.42-10

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Practice Tip: Which Program Is It?

• Who is the landlord?

▫ DCHA = public housing

▫ Private landlord = site-based section 8 or HCVP

But note that in a few public housing properties, there are private managers

• Where does your client recertify? How often does your client recertify?

▫ At rental office every year = site-based section 8

▫ At DCHA every two or three years = HCVP

DCHA is located at 1133 N. Capitol St., NE

▫ At rental office every two years = public housing

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Practice Tip: Which Program Is It?• Is the subsidy portable or tied to the unit?

▫ Tied to the unit = public housing or site-based section 8

▫ Portable = HCVP

• Does your client have any relationship with DCHA at 1133 N. Capitol St.?

▫ Yes = HCVP or public housing

▫ No = site-based section 8

▫ Note: many tenants are on the waiting list at DCHA; ask some follow-up questions to determine how your client interacts with DCHA

• For more notes on the differences amongst the three major programs, see the Subsidized Housing Comparison Chart (Tab 1)

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Eviction & Subsidy Termination

• Public Housing

Eviction is the procedure for terminating the subsidy

Eviction will result in loss of the subsidy – very important to consider this in settlement

Pre-court grievance is available except for one-strike cases – but rarely used or useful (14 DCMR ch. 63)

• Site-Based Section 8

Eviction ordinarily is the procedure for terminating the subsidy

▫ Landlord can terminate subsidy for certain reasons and increase to market rent and then sue for nonpayment of rent

Eviction will result in loss of the subsidy – very important to consider this in settlement

No full administrative grievance available but landlord must offer (and convene if requested) a 10-day meeting

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Eviction & Subsidy Termination (cont.)

• Housing Choice Voucher Program

▫ Eviction and subsidy termination are two different processes

Eviction does not automatically result in loss of the subsidy

But eviction for a serious lease violation is grounds for terminating subsidy –very important to consider this in settlement

▫ Termination of tenant’s subsidy:

DCHA issues a Recommendation for Termination (see sample at Tab 14)

Reasons include failure to recertify, unauthorized occupants, criminal activity, tenant violations of Housing Quality Standards (14 DCMR ch. 58)

Tenant has 30 days to request an informal hearing; if timely request is made, DCHA provides benefits pending (14 DCMR ch. 89)

Tenant can appeal adverse decision to Executive Director, and ultimately to DCCA, Mathis v. D.C. Housing Authority, 124 A.3d 1089 (D.C. 2015)

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Eviction & Subsidy Termination (cont.)

• Housing Choice Voucher Program

▫ Termination of landlord:

DCHA also may terminate landlord from the Voucher Program, typically for landlord violation of Housing Quality Standards

▫ Eviction:

If tenant’s subsidy or landlord is terminated and DCHA stops paying, tenant is likely to face an eviction suit for nonpayment of rent

Protective Order/Bell Hearing concerns – will need to keep protective order at tenant portion to avoid eviction

If tenant is wrongly terminated, may need to involve DCHA in litigation

If landlord is terminated, unpaid subsidy should not be passed on to tenant (24 CFR 982.310) – case law is unsettled and will want to brief

Note: landlord cannot evict a tenant based on voucher status – but some landlords will fail HQS and be terminated themselves to force tenant out

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Getting the Subsidy Documents

• In any eviction case involving subsidized housing, you may want to get documents related to the subsidy – as supportive evidence, to identify any other issues, etc.

• How you get these documents will depend on the type of subsidy

▫ For public housing, the Plaintiff is the subsidy provider, so normal discovery will get you the documents – and the Plaintiff’s attorney also may allow you to come to their office and review the entire file

▫ For site-based section 8, the Plaintiff is the subsidy provider, so normal discovery will get you the documents

▫ For the Housing Choice Voucher Program, you will need to request or subpoena the DCHA file

A file request and a signed release can be sent to DCHA, can take 1 to 2 weeks or more to process (see sample at Tab 7)

Alternatively, a subpoena can be served on DCHA, which may be necessary if you need the documents by a date certain (e.g. for a hearing) (see sample at Tab 8-9)

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What Is Income?

• A few pointers:

▫ In general, all income counts (adults and minors, employment, benefits, earnings from assets)

▫ All household members on the lease count (and unauthorized occupants may get swept in later)

• Definition of income (24 C.F.R. § 5.609)

▫ This definition applies to all federally-subsidized housing programs

▫ Most local program use the same basic formula

▫ Focuses on inclusions and exclusions

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What Is Income? (cont.)

• Included:

▫ All employment income – wages, tips, bonuses

▫ All retirement income – Social Security, pension

▫ All public benefits – TANF, SSI, SSDI, worker’s compensation, unemployment insurance

▫ Child support

▫ Income from assets – interest, dividends

Note that income is deemed to income-generating assets based on the passbook rate (0.06% for 2016)

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What Is Not Income?

• Excluded:

▫ Earnings by minors under 18 years of age

▫ Earnings by adult full-time students above $480

▫ Lump-sum additions (inheritance, settlement, SSI/SSDI/VA back payments)

▫ Income of live-in aide

▫ Student financial aid assistance

▫ Income from certain training programs or SSI/SSDI work attempts

▫ Temporary, non-recurring payments (gifts)

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What Is Deducted From Income?

• Common Deductions:

▫ $480 per minor child in household

▫ $400 per head of household/spouse with a disability or elderly (62 years or older)

• Less Common Deductions:

▫ Unreimbursed medical expenses above 3% of annual income

Keep in mind that most tenants have insurance coverage for most medical expenses; if your client has a lot of unreimbursed medical expenses, this could be a sign of a problem

▫ Child care expenses necessary for employment or education

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Basic Rent Calculation

• #1 - Begin with annual income

• #2 - Subtract any deductions

▫ This is adjusted annual income

• #3 – Divide by 12 to determine monthly adjusted income

• #4 – Multiply by .30 (30%)

▫ This is the total tenant payment (TTP)

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Example of Basic Rent Calculation▫ Your client, Christine Harrison,

earns $11.50 per hour working 20 hours per week.

Her minor son gets $733 per month for SSI.

She is supposed to receive $100 per week in child support for her minor daughter.

▫ Total income =

$11.50 * 20 * 52 = $11,960

$733 * 12 = $8,796

$100 * 52 = $5200

Total = $25,956

▫ Deductions =

$480 * 2 (minor children) = $960

▫ Adjusted annual income =

$25,956 - $960 = $24,996

▫ Monthly adjusted income =

$24,996 /12 = $2,083

▫ Total tenant payment =

$2,083 * .30 = $625

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Utility Allowances

▫ Tenants are supposed to pay 30% of income for rent and utilities

▫ A utility allowance is, in essence, a rent credit that is calculated to approximate the reasonable cost of utilities for a family of modest means in the type of unit your client occupies

▫ If your client pays for utilities, then she probably is entitled to utility allowance

In D.C., public housing units owned and managed by DCHA will have all utilities included

In site-based section 8 and the Housing Choice Voucher Program, some landlords include utilities and some do not – and it may vary by utility, with some landlord-paid and some tenant-paid

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Utility Allowances (cont.)

▫ It is important to note that utility allowances generally are not based on actual usage or actual costs

Landlords are allowed to use engineering methodologies that use modeling and assumptions to calculate average utility needs

Many tenants find that the utility allowances are far below their actual utility costs, even when they try to conserve

▫ Tenants with disabilities may be able to seek a higher utility allowance as a reasonable accommodation

▫ Lots of litigation nationwide to challenge utility allowance calculations – failure to give proper notice, failure to adjust for rate changes, failure to use reasonable methodology

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Utility Allowances (cont.)

▫ How does it work?

In general, the utility allowance will be deducted from your client’s total tenant payment (TTP); the resulting number is the family share (or rent actually due to the owner)

If the TTP is higher than the utility allowance, it will operate as a rent credit

E.g., TTP of $500 and utility allowance of $250 = family share (rent to owner) of $250

If the utility allowance is higher than the TTP, it will operate both as a rent credit and a reimbursement, i.e. your client will receive a monthly check

E.g., TTP of $100 and utility allowance of $250 = zero family share/rent to owner and utility reimbursement of $150

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Common Rent Calculation Challenges

▫ Failure to Report Income Increase/Decrease

Failure to report income or increase in income can result in retroactive rent increase and retrodebit

Failure to report loss of or decrease in income will result in rent remaining too high – decrease only becomes effective once loss/decrease is reported

▫ Income Verification

Can be especially tricky with loss of employment income, where employer may not want to cooperate

Also can run into problems if what employer reports differs from reality on the ground (e.g. discrepancies on number of hours worked)

▫ Failure to Accurately Report Utilities (Esp. in Housing Choice Voucher Program)

Any side arrangements are illegal – for both the owner and the tenant

If your client’s rent seems too high, check if utilities match up

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Note About Sample Documents▫ Sample DCHA Recertification Packet (Tab 10)

▫ Sample HCVP Documents

Voucher (Tab 11)

Rent Determination Notice (Tab 12)

Rent Calculation/Recertification (Tab 13)

DCHA HAP Ledger (Tab 16)

▫ Sample Site-Based Section 8 Documents

Rent Calculation/Recertification (Tab 17)

▫ Sample Public Housing Documents

Notification of Rent Change (Tab 18)

DCHA Rent Ledger (Tab 19)

▫ Sample LIHTC Recertification (Tab 20)

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Rent Abatement & Intervention• For tenant receiving a subsidy, any abatement is calculated

from entire rent amount, not just tenant share

• Basic idea: landlord should not benefit simply because tenant does not pay full market rent

• How it works:

▫ Tenant or court must notify subsidy provider, so it can intervene

▫ If subsidy provider intervenes, tenant and subsidy provider are each entitled to proportional amount of abatement

▫ If subsidy provider does not intervene, windfall goes to the tenant – tenant can receive subsidy provider’s share of abatement

▫ If tenant litigates and obtains judgment for subsidy provider, subsidy provider may be liable for tenant’s costs and attorney’s fees

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Rent Abatement & Intervention (cont.)

• Example scenario:

▫ Contract rent is $1,000

▫ Tenant pays $100; subsidy provider pays $900

▫ Judge/jury awards 50% rent abatement

If entire rent is abated, reduction is $500

If only tenant’s share is abated, the reduction is only $50 per month (5% of the total rent) – landlord essentially gets a windfall of $450

But if tenant gets to keep entire abatement, windfall to tenant is $450 per month

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• When does the rule apply?

▫ Whenever your client may seek abatement that involves subsidy provider’s payments

Most common on tenant’s counterclaim for past payments (by tenant and/or subsidy provider)

But if tenant seeks to calculate recoupment or abatement to include full rent, then subsidy provider’s interests probably are at issue

• Mechanics:

▫ Tenant can send notice to subsidy provider of her intention to seek credit/payment for subsidy provider’s share

▫ Tenant can file certificate of service with court when subsidy provider is served

▫ See samples at Tab 6

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• Subsidy provider typically files motion to intervene and sometimes a separate motion for a declaratory judgment (see samples at Tab 4 & 5)

▫ Review motion(s) to confirm that relief sought (proportional share of abatement) is correct

• Consider timing of notice/invitation to intervene

▫ No clear deadline – and ultimately is court’s responsibility, not yours

▫ Possible impact on settlement, good and bad

Will subsidy provider push for its share of any abatement, requiring landlord to put more money on the table?

Are there concerns that issues may arise at mediation that will tip off subsidy provider to possible program violations by tenant?

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• Strategic determinations may depend on who subsidy provider is and how they will act

▫ In recent experience, DCHA always intervenes but generally does not interfere with settlement or seek abatement at that stage

▫ HUD is not always responsive, more unclear what will happen

▫ Other subsidy providers are less common – ask your mentor

• Cases:

▫ Multi-Family Management Inc. v. Hancock, 664 A.2d 1210 (DC 1995); Anderson v. Abidoye, 824 A.2d 42 (DC 2003); Anderson v. DC Housing Authority, 923 A.2d 853 (DC 2007); Peart v. DC Housing Authority, 972 A.2d 810 (DC 2009)

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Joinder of Other Parties

• Joinder is appropriate where a third party is needed in order to adjudicate all claims and defenses

▫ Typically your client will be claiming the third party is responsible for some of the landlord’s claims

▫ Examples:

Subsidy provider has missed payments, and landlord has sued tenant for this money

Subsidy provider has failed to adjust tenant’s rent following a decrease in income, and landlord is charging the higher rent

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Joinder of Other Parties (cont.)

• File Motion to Join subsidy provider as necessary party (Civ. R. 19) (sample at Tab 2)

▫ Note: Civ. R. 19 is incorporated into the LT Branch, but third-party practice rules are not, see LT R. 2

▫ As a practical matter, LT Court typically grants motion, serves a copy of the Complaint on subsidy provider, and grants them time to file a responsive pleading

▫ At some point LT Rules likely will include a special rule on third-party practice (stay tuned)

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Other Third Party Issues

• DCHA termination of Housing Assistance Payments (HAP) contract with landlord

▫ Common scenario in Housing Choice Voucher Program

▫ Typically, DCHA terminates landlord for Housing Quality Standards violations following multiple failed inspections

▫ DCHA abates and then terminates its payments, i.e. stops paying its share of the rent

▫ Landlord then will sue tenant for DCHA’s share of the rent

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Other Third Party Issues (cont.)• If DCHA stops its payments, is the tenant responsible for

paying the full rent?

▫ No settled law in D.C., but cases from other jurisdictions say no, relying on federal regulation and equity

▫ 24 C.F.R. § 982.310 states that the landlord may not require the tenant to pay the subsidy provider’s share; also incorporated into HAP contract

Landlords will argue this does not apply once HAP terminates

▫ Ultimately court is likely to view this as an equitable question:

Tenant cannot remain in the unit indefinitely while only paying a limited share of the rent

But tenant also cannot be expected to move overnight or to pay the full rent with limited income

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Other Third Party Issues (cont.)

• Process for HAP contract termination

▫ DCHA inspects all units on at least a biennial basis and also responds to tenant requests for inspections

▫ DCHA will issue initial inspection report citing violations, mailed to landlord

▫ DCHA typically will return in about 30 days (unless emergency violations)

▫ If landlord fails second inspection, DCHA abates (stops) payments to the landlord

▫ If landlord does not request, pay for inspection ($75), and pass third inspection, then HAP contract terminates

▫ See Tab 15 for sample documents

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Other Third Party Issues (cont.)• Practice pointers

▫ If landlord makes repairs but refuses to pay for third inspection, tenant can request inspection herself without paying

▫ If repairs are minor, tenant also can consider making repairs and deduct from rent (prior notice to landlord is recommended)

▫ If parties already are in court, tenant can seek injunctive relief and request extension for third inspection from DCHA

▫ Parties can always “lease in place”, i.e. enter a new lease and get back in the program, provided the unit will pass inspection

Note: a lease in place does not necessarily have to include a one-year lease, the lease period could be shorter. Alternatively, the parties can sign a separate agreement that tenant can terminate lease without penalty with 30-day notice, even during initial term.

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Other Third Party Issues (cont.)

• Bell Hearing issues

▫ If DCHA has terminated its payments, landlord likely will request a protective order for tenant to pay full rent amount – an amount the tenant cannot afford to pay

▫ Practice pointers: file a brief for the court prior to the hearing (sample at Tab 3) and schedule the case for a Bell hearing and a motion hearing

If the case is scheduled for a motion hearing, the attorney advisor will prepare a written summary of your brief for the court

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