National Housing Law Project Housing Law Bulletin

Housing Availability Curtailed by Continuing Resolution:
HUD Issues Implementing Guidance

Continuing Resolution Reduces HUD Programs' Funding and Protections

Reduced Funding Levels

In addition to funding HUD programs at the levels included in the FY 1996 appropriations conference report, the continuing resolution contains a mix of administrative provisions and cost-savers cost-cutting language designed to reduce the need for federal dollars to support low-income housing programs. On the funding side, for example, in accordance with the conference report, public housing operating subsidies and modernization assistance are funded at $2.8 billion and $290 million respectively. Both figures represent a decrease from FY 1995 levels. The continuing resolution includes funding for 35,000 non-incremental vouchers primarily to aid in the elimination of distressed highrise public housing, primarily in central cities.²

Administrative Changes

Nominally, only administrative changes that will achieve cost savings are implemented through the continuing resolution. Fair market rents continue to be set at the 40th percentile, reducing the amount of housing affordable to Section 8 participants.³

One of the most troublesome provisions is a change that will make Section 8 assistance unavailable to populations in dire need — particularly homeless people — during the coldest months of the winter. The continuing resolution imposes a six-month delay on reissuance of certificates and vouchers that have been turned in by Section 8 families no longer requiring or receiving assistance.⁴ This "cost-cutting" measure, while effecting on-paper savings by virtue of the mandatory delay, obviously imposes costs in terms of human suffering from the six months of withheld assistance.

For both public housing and Section 8, the continuing resolution threatens the Brooke Amendment⁵ by requiring public housing authorities (PHAs) to charge a minimum $25 monthly rent, with discretion to go to $50.⁶ Ceiling rents are included as a means of retaining working people in public housing, and the law authorizes PHAs to adopt adjustments to earned income that will encourage such families to apply or remain although reductions in rental income as a result of such adjustments will not be considered in calculating a project's operating subsidy.⁷ Federal preferences, along with existing law capping annual rent increases resulting from employment, are repealed.⁸

Among other significant changes is adoption of reforms to the FHA's Single-Family Assignment program which provides mortgage relief assistance to families experiencing job loss or other circumstances beyond their control that preclude their timely payment of their monthly mortgage. The continuing resolution essentially makes the program discretionary rather than mandatory, shortens its term to 12 months, and prohibits judicial review of any action or failure to act on the part of HUD.⁹

HUD's Implementing Notices

Minimum Rents

The HUD Notice abandons the notion of retroactive implementation of the minimum rent provisions. Although the minimum rent is to be charged immediately for newly accepted residents, current participants are subject to the minimum rent no later than April 1, 1996. However, any changes in rent must be implemented consistently with existing leases. Accordingly, whatever the lease provides with respect to how changes in the rent may be implemented takes precedence over HUD's implementing instructions, and notice must be provided to tenants of any rent changes.¹¹

For both public housing and Section 8 certificate and Moderate Rehabilitation programs, the Notice provides that the total tenant payment (TTP) must be effectively the greatest of 30 percent of adjusted income or the $25 minimum rent, or such higher amount up to $50 adopted by the PHA. The Notice makes clear that adoption of the minimum rent does not affect the ability of public housing and Section 8 certificate and Moderate Rehabilitation families to continue to qualify for a utility reimbursement.¹² Voucher families must pay a minimum $25 rent and will continue to be responsible for the difference between the monthly rent and the housing assistance payment made by HUD. Such families must continue to pay for utilities for which they are responsible under the lease.¹³

For public housing, a PHA board resolution is required to be adopted for a minimum rent in excess of the statutorily mandated $25. The resolution, a copy of which must be provided to the relevant HUD field office, must also provide the effective date of the rent and explicitly advise that, in the absence of the enactment of legislation making the changes permanent, the minimum rent policy expires at the end of the current fiscal year (September 30, 1996). HUD cautions PHAs to consider the potential impact on residents in deciding to exceed the mandatory $25 minimum. Even if only the $25 minimum is imposed, the PHA must change its tenant selection and occupancy policy as required by its own governing procedures.¹⁴

For the Section 8 certificate and Moderate Rehabilitation programs, any increases beyond the $25 minimum must be implemented through a revision to the PHA administrative plan adopted by the PHA board or other "authorized" PHA officials. The plan must set out that the change is effective only until the end of the fiscal year, barring enactment of additional legislation. Appropriate notice to the field office is mandated.

As is the case with public housing, applicants must be charged the minimum immediately, with current participants charged prospectively no later than April 1. "Adequate notice" to both tenants and owners is required.¹⁵

Adjustments to Earned Income

For public housing, the Notice observes that, while the continuing resolution authorizes PHAs to adopt adjustments to earned income other than those appearing in current law, any resulting loss in rental income is at the PHA's peril. Rental income increases may be retained by the PHA, and HUD may issue additional guidance regarding such retention in the near future. Any additional adjustments remain in effect only between the date of enactment of the continuing resolution and the end of the fiscal year. The Notice instructs that, with respect to any newly adopted adjustments, adjusted income determinations could be applied until the tenant's next reexamination but could not be used in reexaminations after the end of the fiscal year, in the absence of subsequent legislation. No current income exclusions such as earnings from participation in the Family Support Act or other employment programs specified in current law are affected by the authorization to adopt new exclusions.

Additional adjustments require the amendment of PHA admissions and occupancy policies through PHA board resolution to specify what the additional adjustment is, its effective date and a statement that the policy expires on September 30, 1996,
in the absence of new law. While notice to all resident families is required, HUD recommends that PHAs consider providing notice to the public as an aid in marketing units to higher income applicants.¹⁶

Suspension of Federal Preferences

Federal preferences for displaced households, those paying more than 50 percent of their income for rent, and those living in substandard housing are eliminated for FY 1996, commencing with the date of the continuing resolution's enactment. As a result, public housing residents also lose their federal preference status on Section 8 waiting lists. Moreover, the Notice provides that the "anti-skipping" provisions of current law which forbid PHAs from taking higher income families out of chronological order on the waiting list are also suspended by the continuing resolution.

The Notice authorizes PHAs, after an appropriate notice and comment period, to devise a written system of local preferences so long as they are not inconsistent with the local or state Comprehensive Housing Affordability Strategy (CHAS). For public housing, the current 50-percent cap on local preference admissions is inapplicable. Similarly, for the Section 8 program, the 10-percent cap in the tenant-based program and the 30-percent cap in the project-based program are inapplicable for the current year.

On unintended consequence of the sweeping suspension of federal preferences was the removal — for public housing — of the statutory requirement for income mix. The Notice urges PHAs to keep selection and admission policies that will continue the mixed-income policy.¹⁷

In the case of the statutory prohibition in the Section 8 program against granting preferences to applicants evicted from federally assisted housing during the past three years due to drug-related criminal activity, the Notice recommends, as with public housing, the retention of the policy to deny a preference or adoption of a policy permitting rejection based on drug-related or violent criminal activity.¹⁸ The Notice sets out the parameters under which any changes to the PHAs' Section 8 selection policy must be guided: (1) family size or the dwelling unit size for which an applicant family qualifies cannot govern the order of admission from the waiting list; (2) residency preferences must be approved by HUD as required under current law; (3) elderly, disabled, or displaced persons continue to enjoy a statutory admissions preference over other single applicants; and (4) prohibited admissions criteria remain in effect.¹⁹

The Notice directs PHAs that, for both public housing and Section 8, any change in the current preference system, however seemingly minor, requires notice and an opportunity for public comment.²⁰ Even dropping federal preferences but retaining local preferences or retaining federal preferences but lowering the applicable percentage requires such notice and public comment opportunity.

For the public housing and Section 8 tenant-based programs, any new tenant selection policy requires revision to the PHA's admission policy and board adoption, along with "appropriate notice" to applicants and others. The form of notice is left to the discretion of the PHA guided by "reasonable judgement."²¹ The implementing notice for project-based Section 8 is expected sometime in March.

Suspension of the federal preferences has no effect on families offered a public housing unit before the date of enactment of the continuing resolution (January 26, 1996) or who were in the process of accepting the unit on the date of the Notice (February 13, 1996).²² Similarly, families issued certificates or vouchers as a result of their federal preference status are not affected.²³

1. H.R. 2099, Making Appropriations for FY 1996 for the Department of Veterans Affairs, Housing and Urban Development and Independent Agencies, was vetoed on December 18, 1995.
2. For analysis of H.R. 2099, see FY 1996 Appropriations Bill: A Triage Plan that Sacrifices the Poorest of the Poor, 24 HOUS. L. BULL. 193 (Dec. 1995).
3. Pub. L. No. 104-99, § 403(a).
4. Id. § 403(c).
5. See The Brooke Amendment Should Not Be Repealed elsewhere in this issue.
6. Pub. L. No. 104-99, § 402(a).
7. Id. §§ 402(b) and (c).
8. Id. §§ 402(d) and 404.
9. Id. § 407.
10. HUD Notices PIH 96-6(HA), "Administrative Provisions of the January 26, 1996, Continuing Resolution Affecting Public and Indian Housing Programs," and PIH 96-7(HA), "January 26, 1996, Continuing Resolution Statutory Changes Affecting the Administration of the Section 8 Certificate, Voucher and Moderate Rehabilitation Programs" (issued Feb. 13, 1996; expires Sept. 30, 1996).
11. HUD Notice PIH 96-6, § 2(a)(3).
12. Id. § 2(a); HUD Notice PIH 96-7, § 2(D).
13. HUD Notice PIH 96-7, § 2(D)(2).
14. HUD Notice PIH 96-6, § 2(a)(3).
15. HUD Notice PIH 96-7, § 2(D)(3).
16. HUD Notice PIH 96-6, § 2(c)(3).
17. Id. § 2(d)(2).
18. HUD Notice PIH 96-7, § 2(B)(4).
19. Id. § 2(B)(3).
20. HUD Notice PIH 96-6, § 2(d)(3); HUD Notice PIH 96-7, § 2(B)(3).
21. HUD Notice PIH 96-6, § 2(d)(3); HUD Notice PIH 96-7, § 2(B)(3).
22. HUD Notice PIH 96-6, § 2(d)(3).
23. HUD Notice PIH 96-7, § 2(B)(3).