HUD Housing Programs: Tenants’ Rights (The Green Book): V
Very-Low Income: Households whose incomes do not exceed 50 percent of the median area income for the area.
Very-Low Income: Households whose incomes do not exceed 50 percent of the median area income for the area.
This comprehensive manual provides critical information on the rights of tenants who reside in HUD-subsidized or assisted housing, providing a detailed review of the current law coupled with historical overviews of the various programs. This book is for advocates who represent tenants or HUD-housing applicants, as well as housing providers and managers, affordable housing advocates, policymakers, and scholars.
Because of its complexity, a brief description of the Department of Housing and Urban Development’s (HUD) bureaucratic structure will help determine which office or official might be responsible for resolving different kinds of problems.3 In 1965, HUD was created as a cabinet-level agency by the Department of Housing and Urban Development Act of 1965. Sitting atop the HUD bureaucracy is its Secretary, who is responsible for administering all HUD programs.
HUD administers the federal housing programs through rulemaking and agency decisions. The process of formal rulemaking is governed by the Administrative Procedure Act,8 which generally requires publication of the proposed rule, a comment period, adoption and publication of the final rule.
Because of the variations in the applicable rules, it is important to know whether a client lives in housing subsidized under a federal program and, if so, which program provides the subsidy. Easy cases are when the client knows the exact program or you are familiar with the building where the client lives. Alternatively, the landlord or management personnel at the client’s property may be able to provide this information.
The United States Housing Act of 1937 established the conventional public housing program.23 Today, about one million households live in public housing units,24 which are managed by approximately 3,300 public housing authorities (PHAs). Despite income limits ranging up to 80 percent of the AMI, the average income of an average-sized public housing family of 2.1 persons was $14,412 in 2015, which is below the poverty level. More than 10,000 public housing homes are lost each year due to disrepair.
Congress adopted the Section 23 leased housing program in 196550 and replaced it with the Section 8 housing program in 1974.51 Section 23 projects were required to be converted to the Section 8 program.52 For more information on Section 23, see the Companion Website.
HUD began experimenting with the concept of public housing homeownership in 1968 when it created the Turnkey III program for building new public housing units for eventual sale to the tenants.54 In 1984, HUD undertook a demonstration program to sell existing public housing projects to their residents.55 In 1988, Congress added a statutory program for the sale of existing units to tenants56 and then replaced that program with the HOPE for public housing h
In 1968, HUD administratively created a homeownership program for tenants residing in public housing called the Turnkey III homeownership program,61 followed by Section 5(h) of the revised United States Housing Act, which authorized homeownership programs.62 HUD later issued extensive regulations63 and a Handbook64 on the Turnkey III program, as well as regulations on the Section 5(h) program.
In 1984, HUD launched a Public Housing Homeownership Demonstration (PHHD), involving approximately 20 housing authorities and about 2,000 units. HUD created the PHHD to find practical ways to enable public housing tenants to become homeowners through the sale of public housing units. The demonstration was intended to help develop regulatory criteria for implementing the disposition authority contained in Section 5(h) of the Act. Under the demonstration, tenants had to have the cooperation of the PHA and access to appropriate technical assistance.
Section 123 of the Housing and Community Development Act of 1987 authorized a resident management corporation (RMC) with at least 3 years experience in successfully managing a project to purchase one or more multifamily buildings from a PHA for resale to homeowners.73 This provision sunset in February 1991.74 RMCs were permitted to resell only to lower income families residing in or eligible to reside in Public Housing.75
In 1990, HUD proposed and Congress enacted the HOPE I program to expand homeownership opportunities for low income people.76 The HOPE I program helped low-income people buy public housing units by providing planning and implementation grants to eligible applicants to develop and implement homeownership programs.77 The grantees, which could be PHAs, resident organizations, non-profit organizations, or public bodies, acted as intermediaries between the PHA and the eventual homeowners.
HUD’s current public housing homeownership program is authorized under the Quality Housing and Work Responsibility Act of 1998,80 which created Section 32 of the United States Housing Act of 1937.81 This program replaced the Section 5(h) public housing homeownership program. In March 2003, HUD published its final rule implementing Section 32.82
Starting around 1960, Congress created a number of direct loan and mortgage insurance programs, providing different levels of affordability for residents. The programs discussed in this section have provided effective interest subsidies and HUD rent restrictions to make rents more affordable.
The oldest of the Federal Housing Administration’s (FHA) low- and moderate-income housing programs was the Section 221(d)(3) Below-Market-Interest-Rate (BMIR) program. Created by Congress in 1961, the program provided subsidized financing—at 3 percent mortgage rates—to private developers of rental housing for families.100 The program continued until 1968, when the Section 236 program replaced it as a vehicle for producing multifamily housing for lower income families.
In 1968 Congress replaced (for purposes of new projects) the Section 221(d)(3) BMIR program with the Section 236 program, which was also intended to subsidize the development of privately owned housing for low and moderate income families.102 This program was active for new commitments until Congress ceased appropriating funds for it in 1973,103 and the pipeline for new projects was exhausted a few years later.
Overview. Section 202 has undergone several interations, utilizing different structures from the original Section 202 program created in 1959. The newer-Section 202, Section 811, and PRAC programs, along with some of the older Section 202 properties, are governed by a unified regulation, 24 C.F.R. Part 891, which sets forth residents’ rights and owners’ responsibilities. HUD has also published several handbooks related to the programs.123
In 1978, Congress created the Flexible Subsidy program for housing projects developed under the FHA-subsidized programs, including the Section 221(d)(3) (BMIR) and Section 236 programs.143 While not technically a subsidized mortgage insurance program, the Flexible Subsidy program was usually used in conjunction with such programs, at least until funding ceased after FY1995. It remains relevant because there may be outstanding loans or Use Agreements that affect operations at developments that still provide affordable housing.
In 1974, Congress enacted Section 8 as the primary vehicle for the federal government’s efforts to provide an adequate supply of low-income housing.147 Although Section 8 is only one section of the revised United States Housing Act of 1937, it authorizes a number of distinct programs, including: Tenant-Based Section 8 Housing Choice Vouchers, and numerous project-based programs, including New Construction, Substantial Rehabilitation, Moderate Rehabilitation, the Additional Assistance program for projects with HUD-insured and HUD-held mortgage
Under the Section 8 New Construction program,161 HUD contracted directly with developers who then acquired sites and constructed housing specifically for the Section 8 program.162 All forms of rental housing, including cooperative housing, were eligible for the program, and the units were anything from single-family homes, including mobile homes, to apartments in high-rise developments.163 In addition, the rents charged had to be within limitations
The Section 8 Substantial Rehabilitation program181 is essentially the same as the New Construction, program except that it assisted only units substantially rehabilitated specifically for the Section 8 program.182 Cosmetic improvements alone did not qualify as substantial rehabilitation, but anything from curing a substantial accumulation of deferred maintenance to complete gutting and renovation of a building did qualify.183
To encourage the development of subsidized low-income housing in small towns and rural areas, Congress annually set aside a specific amount of Section 8 appropriations for HUD to use with newly constructed housing financed by the Rural Housing Services (RHS, formerly Farmers Home Administration) under Section 515 of the Housing Act of 1949.192 HUD also established regulations for projects developed under this program.193 The regulations resemble the basic regulations for the Section 8 New Constr
Another set aside of the appropriated Section 8 funds is used for projects for elderly or people with disabilities, financed under the Section 202 loan program.200 Prior to 1990, the Section 202 program provided direct HUD loans to nonprofit sponsors of housing projects for elderly or people with disabilities.201 HUD established special regulations for the processing of applications for those loans,202 which contained some provisions on project man
Soon after the Section 8 program was created, HUD administratively decided to make some of the appropriated Section 8 funds available to already existing FHA-subsidized projects (such as Section 221(d)(3) BMIR or Section 236), which were encountering financial difficulties. This resulted in the Loan Management Set-Aside (LMSA) program (or the Additional Assistance program). Under this program, Section 8 subsidies were made available to tenants in projects that were unable to raise their rents high enough to meet rapidly escalating operating expenses.