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HUD Housing Programs: Tenants’ Rights (The Green Book): 12.3.5.1 Introduction

An owner’s default on the loan and mortgage can threaten HUD-subsidized units by precipitating a foreclosure by HUD and a termination of the property’s use and affordability restrictions. Even where HUD acquires title at the foreclosure sale and seeks to re-sell the property, continued use of the property as affordable housing can be jeopardized.

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.1 Introduction

This chapter discusses several types of PHA Plans: the Annual Plan, Five-Year Plan, Section 8 Administrative Plan, public housing Admission and Continued Occupancy Policy, and the Moving to Work Plan. It further focuses on the PHA Plan process and highlights how residents, advocates and the public can influence important policies governing the public housing and Voucher programs. The last section of this chapter briefly covers other plans that are related to the PHA Plan.

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.2.1 Overview

The Quality Housing and Work Responsibility Act of 1998 (QHWRA) devolved responsibility for administering public housing and Voucher programs to local PHAs.1 In exchange for the increased authority given to PHAs, QHWRA required that PHAs develop a PHA plan that must be approved by HUD.2 The PHA Plan includes information and policies for public housing, the Voucher program, the Section 8 Moderate Rehabilitation program3 and any special allocat

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.2.2.1 Overview

Residents, program participants, advocates and the public may engage in the PHA’s planning process (PHA Plan Process) to understand the PHA’s policies and plans, to make comments that guide the PHA in a manner affecting the most beneficial change and to object, when necessary. Housing advocates should work with PHA staff and governing boards, program participants, tenant councils and RAB members to establish policies and housing programs that benefit low-income program participants and applicants.33

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.2.2.2 Public Housing

QHWRA and HUD regulations require a PHA to establish one or more Resident Advisory Boards (RABs) to assist with developing the PHA Plan.34 A RAB is a board composed of individuals that adequately reflect and represent the residents assisted by the PHA.35 Congress required the establishment of RABs to facilitate a “meaningful and trusting partnership between the PHA and its residents.”36 It anticipated that RABs would be significant and perman

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.3.5.3 Key Issues

Foreclosure or disposition of a HUD-subsidized property inevitably raises critical issues concerning housing quality, affordability, long-term use, and possible displacement. Although the issues facing tenants are similar, the rules, processes and financial resources for the foreclosure and HUD-owned disposition stages will differ, which may in turn require strategic decisions. Foreclosure may be beneficial, allowing ouster of poorly performing ownership and management, and permitting a restructuring of a property’s debt and operating expenses.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.3.5.4 Applicable Laws and Regulations

Congress has enacted numerous policies governing the foreclosure and HUD-owned disposition process. For many of these statutes, HUD has also adopted implementing regulations and subregulatory policies. This subsection provides a brief overview of these laws and policies. Because of their complexity, any potentially applicable laws and policies should be closely reviewed to determine whether HUD is exercising its discretionary authority legally.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.1 Overview

Units may lose Project-Based Section 8 rental assistance for variety of reasons. First, an owner may refuse to renew the housing assistance payment contract on the terms that HUD offers at the contract’s expiration (“opt out”). Second, HUD or the responsible agency may seek to terminate the contract for serious violations during the contract term or fail to renew the contract at its expiration. Third, Congress and HUD may fail to appropriate sufficient funds to fulfill the obligations of the contract, either during its term or at renewal.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.2.1 Introduction

Because the terms of Section 8 Project-Based contracts are limited, usually shorter than the term of the loans financing their capital costs, they may end prematurely, on dates unrelated to tenant or project needs. Although most of the original contracts had 20-year terms, some were as short as five years. Since the mid-1990s, after expiration of the original contracts, many renewal contracts have had one-year terms, subject to annual appropriations. Some owners have agreed to longer renewal terms, usually between five and 20 years, subject to annual appropriations.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.2.2 Legal Claims to Challenge Section 8 Opt-Outs

Substantive and procedural requirements may protect the interests of tenants in units threatened by opt-out. However, there is no mandatory duty for the owner to remain in the program if the rents are adjusted to market comparables. Usually, because the renewal decision rests with the owner, tenants and advocates must rely on a patchwork of restrictions and incentives in the applicable laws and guidelines to preserve units, or at least to protect tenants against involuntary displacement.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.3 HUD or Agency Termination or Refusal to Renew Project-Based Section 8 Contract

Despite an owner’s desire to renew, the Section 8 regulatory agency (HUD, a contract administrator, or a Participating Administrative Entity (PAE)577 exercising administrative responsibilities under contract with HUD) may refuse to renew a contract with an otherwise eligible owner, after a planning or review process, based on specific criteria concerning housing quality or owner performance.578 An agency refusal to renew may affect projects seeking ordinary renewal, as well as those elig

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.4 Insufficient Appropriations to Fund Expiring Project-Based Section 8 Contracts

Congress must appropriate funds annually to renew expiring Section 8 contracts and they have done so on an annual basis for the past several years. However, because the subsidy commitments for renewal contracts, regardless of their contracts’ stated terms, last for only one year at a time, there is always the risk that Congress will not appropriate funds sufficient to cover all existing units at their required rent levels.600 Federal budget deficits and the uncertain politics of domestic discretionary spending heighten this risk.

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.5 Voucher Conversion under Mark to Market Restructuring

When an owner of a property with above-market rents renews a Section 8 contract, the renewal rents are usually limited to market levels. Some owners must pursue Mark to Market debt restructuring, which may require other changes, such as the conversion of project-based assistance to tenant-based Vouchers. The FY 18 appropriations legislation extended the Mark to Market program until October 1, 2022.604

HUD Housing Programs: Tenants’ Rights (The Green Book): 12.4.6 Underutilization or Improper Use of Project-Based Section 8 Units

A Section 8 contract does not guarantee that subsidized units are invariably made available to eligible families. Sometimes, an owner does not utilize the Section 8 subsidies, instead renting units to over-income tenants or leaving units vacant and not claiming assistance payments from HUD. Alternatively, an owner may rent large units to income-eligible families who are too small for the units, making those units unavailable to larger families.

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.2.2.3 Voucher Program

Voucher participants have the right and responsibility to be involved in the PHA Planning Process and to be represented on the RAB. If the PHA administers a Voucher program and the number of families assisted under the Voucher program is 20 percent or more of all families assisted by the PHA, voucher participants must have reasonable representation on the RAB.76 In practice, PHAs have added voucher participants to a RAB, including a RAB that is composed of a jurisdiction-wide tenant council.

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.2.3 Timeline for PHA Plan Process

The statute and HUD regulations establish some key deadlines in the Plan Process, but leave much of the detail to the local PHAs.80 Seventy-five days before the end of the PHA’s fiscal year, each PHA is required to submit its final Plan to HUD.81 In addition, every PHA is required to have at least one public hearing on the proposed Plan and provide the public a 45-day written notice of that hearing, which is typically published in local newspapers and/or posted on the PHA’s website.

HUD Housing Programs: Tenants’ Rights (The Green Book): 8.2.4 Obtaining PHA Plans

Proposed Plan. Each PHA is required to make the proposed Plan available to the public at least 45 days before the public hearing.86 In addition, drafts of the proposed plan should be available to the RAB as early as possible so that it may make meaningful and effective comments.87 If the proposed Plan is not available, residents and their advocates may seek assistance from HUD to obtain copies from the PHA or make a request under a state freedom of information act.