Access to Utility Service: 10.6.3 Reasons for the Inadequate Allowances
The GAO cited a number of reasons that household expenses differ so radically from the allowances set by PHAs:
The GAO cited a number of reasons that household expenses differ so radically from the allowances set by PHAs:
Under the performance funding system (PFS), PHAs receive an operating subsidy from HUD for the day-to-day management of the public housing. The subsidy is a major source of operating income for PHAs; their only other source of income, household rental contributions, is generally insufficient to cover operating expenses. The operating subsidy is calculated according to a formula under which the PHA receives the difference between the estimated expenses and the income the PHA expects to receive from the rents.231
The GAO had a number of concrete recommendations to improve the dismal utility allowance situation:
Over the past three decades, tenants have brought a number of cases against public housing authorities and other parties (including HUD) alleging that the utility allowances were set too low and in violation of applicable laws and regulations.
PHAs have argued in the past that tenants have not stated a claim under 42 U.S.C. § 1983, have no implied right of action to enforce the Brooke Amendment and are not third-party beneficiaries of the ACC. HUD has argued that its actions with respect to utility allowances are committed to agency discretion and therefore not reviewable under the APA, that tenants have no implied right of action under the Brooke Amendment, that tenants are not third-party beneficiaries of the ACC and that PHAs, not HUD, are the proper defendants.256
The relief obtained by tenants both with and without litigation has been substantial. In one case, for example, tenants in Gadsden, Alabama, obtained a court order setting forth new utility allowances and requiring the PHA to update those allowances at least annually. The court ordered the PHA to increase the gas utility allowances for tenants who purchase their own gas. These allowances had formerly been set at $5 to $8 monthly, depending on the number of bedrooms, and were increased to $25 to $36.
Advocating for tenants around utility allowance issues is a fact-intensive exercise. Unlike many other areas of law, the legal standard is quite clear. HUD regulations require that tenants in most subsidized units who pay their own utility bills (individually metered tenants) or who face surcharges if they use more than a specified amount of energy (check-metered tenants) be provided “reasonable” utility allowances.
Many tenants have high and unaffordable bills because their buildings are poorly insulated and poorly maintained. Apartment units may have broken windows, old and inefficient appliances, or defective heating or cooling systems. If these or other factors are the cause of excessive utility charges, the PHA should be urged to seek out funds to insulate and make other necessary repairs.
As noted above, to evaluate the “reasonableness” of the PHA’s utility allowance, the actual energy consumption by project tenants must be determined. For check-metered units, the PHA preferably would provide the actual utility bills.277 Alternatively, tenants can obtain Form 52722278 (Calculation of Utilities Expense Level) and the results from the utility expense level calculator279 if that was used by the PHA.
When evaluating utility allowances, check whether the allowance:
In order to analyze the adequacy of current utility allowances, it is important to compare the average consumption for either check-metered or retail-metered units to the consumption assumed by the PHA in setting the allowances. The first step is to obtain the monthly utility bills or meter readings, sorted by building type and bedroom size (for example, sorted by one-, two- and three-bedroom high-rise units; one-, two- and three-bedroom row house units, and so forth). The next steps are as follows:
For units that a PHA owns directly, the PHA must fill out Form 52722 (Calculation of Utilities Expense Level).284 Form 52722 can be very useful in efforts to represent check-metered clients.285 On Form 52722, the PHA reports actual consumption separately for sewerage and water, electricity, gas, and other fuels (wood, oil, coal, and so forth). The PHA also provides data over the prior three years, allowing advocates to track changes in consumption patterns over time.
When tenants pay for their own utilities, they may already have copies of their own bills available. Alternatively, almost every utility will produce, at the customer’s request, a billing history that covers at least the last twelve months of usage. Only in unusual cases will advocates need to use other means to estimate consumption by retail-metered tenants.
Utilities for heat make up one-half or more of the utility bills paid by tenants who live in apartments for which they pay for heat.287 Any accurately estimated allowance for heat utilities would be based upon the actual data for the unit. This is rarely the case.
Some tenants faced with inadequate utility allowances have negotiated with their public housing authority (PHA) to develop a plan to assist the local public housing authority in collecting and evaluating relevant data. Many PHAs lack the time and expertise to establish reasonable utility allowances, and they do not gather the relevant information because no one is “making them” do it.
The regulations provide that PHAs may grant relief from allowances or surcharges “on reasonable grounds, such as special needs of elderly, ill or disabled tenants, or special factors affecting utility usage not within the control of the resident.”300 The PHA must establish “criteria” for granting such relief, as well as “procedures for requesting such relief.”301 Notice of the criteria, the procedures, as well as the name of the PHA representative from whom to request this relief must be pro
Federal law now requires PHAs to prepare one-year and five-year agency plans on an ongoing basis.304 The law requires each PHA to establish “1 or more resident advisory boards” which “shall assist and make recommendations regarding the development of the public housing agency plan.”305 While the required contents of the plan306 need not address utility allowances per se, the law is clear that PHAs “must consider” recommendations made by resid
Public housing tenants are sometimes involuntarily displaced from a housing development because of a construction project which is federally financed. This occurs, for example, when the public housing authority has decided to re-develop the site as low-and moderate-income housing, using HOPE VI or other federal housing modernization program funding. These displaced tenants may be entitled to supplemental rent and utility payments to help defray increased costs in their new dwellings.
The widespread availability of consumer credit and the high cost of uninsured medical care have left many consumers with unmanageable debts.
Nonprofit credit counseling agencies largely came into existence in the middle of the twentieth century. In the early 1950s, as America’s consumer economy began to recover from the Second World War, merchants increasingly began to offer goods on credit to expand sales.16 Making it easier to buy on credit also made it easier to get into debt. Increased debt naturally led to higher losses for businesses when families could not pay their bills.
After education, debt management plans (DMPs) are one of the most prominent tools that credit counseling agencies offer to assist indebted consumers. An estimated one-third of counseling agency clients enroll in DMPs.47 Under a DMP, a consumer agrees to send a lump sum to the credit counseling agency, usually on a monthly basis. The agency then distributes that payment to the consumer’s various unsecured creditors on a similar schedule, until the consumer has fully paid off all debts included in the plan.
The little data available suggests that DMPs have a high failure rate, and that they are a significant source of counseling agency income. One NFCC report found that only twenty-one percent of DMPs to end that year ended because the consumer successfully completed the plan.
One area of credit counseling that has exploded, in terms of the number of consumers served, is the credit counseling required by the United States Bankruptcy Code for consumers entering and leaving a bankruptcy proceeding.
In contrast to credit counseling agencies that provide debt management plans, debt settlement firms do not send regular monthly payments to creditors. Instead, they claim that they will negotiate a lump-sum payoff of the consumer’s debts—usually after the consumer accumulates enough money in a special savings account (though few consumers are able to accumulate sufficient funds).70 Currently, debt settlement is only offered by for-profit entities. However, nonprofit credit counselors are exploring a safe alternative.
The main problems with debt settlement, as described in various reports,81 are the following: