National Housing Law Project Housing Law Bulletin

HUD FY 1996 Appropriations Act (H.R. 3019)
Contains Important Substantive Changes

In addition to the funding levels set out above, the Act extends until the end of the federal fiscal year many important substantive changes, including the administrative provisions contained in the FY 1995 Rescission Act.² Other changes permit the conversion of some public housing units to vouchers, a minimum rent waiver, a "mark-to-market" demonstration program for projects with expiring use restrictions, and the tabling of the controversial plan to transfer fair housing enforcement to the Department of Justice. In the Section 8 program, existing requirements for good cause for eviction protections upon lease expiration and the 90-day notice requirement are eliminated.

Public Housing

Expanded use of Modernization funding. Public housing modernization funds may be used for demolition, rehabilitation and replacement, and up to 10 percent may be used for any operating subsidy purpose. Public housing authorities (PHAs) may make loans or grants to mixed-income developments administered by entities other than the PHA.³ The suspension of one-for-one replacement requirements commenced in the Rescission Act are continued.⁴

Conversion of some public housing to vouchers. To convert some public housing to vouchers, PHAs are required to identify developments with 300 or more units and 10-percent vacancy rates for which the costs of modernization and operation exceed the cost of providing tenant-based assistance. In conjunction with the Secretary, the PHAs must develop conversion plans for the removal of such units from their inventories. Replacement certificates and vouchers are to be provided to families relocated from such developments.⁵

Minimum rent waivers. On the minimum rent, Congress amended existng law to provide that the normal 10-percent-per-year phase-in requirement enacted in 1983 does not apply to rent increases caused by the minimum rent statute.⁶ Congress also authorized the PHAs and HUD to waive the minimum rent requirement in order to provide a transition period of up to three months for affected families.⁷ The report language indicated that the waivers are intended to cope with occasions when families are experiencing serious financial hardship and cannot afford even the most minimal rent contribution.⁸

Moving to Work Demonstration program. The Department is authorized to administer for 30 PHAs a Public Housing/Section 8 Moving to Work Demonstration designed to examine more cost-efficient ways of delivering housing assistance that will create incentives for working families or families preparing for work through job training or educational programs and which promote housing choice. The Act authorizes PHAs to combine operating subsidies, modernization funding and Section 8 with services to achieve demonstration goals. Seventy-five percent of the families participating in the demonstration must be very low-income households, and assistance to the same number of eligible low-income families must be continued.⁹

Section 8 Housing

Suspension of some discrimination protections. As with public housing, there are substantive changes for Section 8 as well. These include suspension of Section 8(t), which bars already participating Section 8 landlords from discriminating against other applicants with certificates or vouchers solely because they have such assistance.

Limited good cause eviction protection and suspended 90-day termination notice requirement. The requirement for good cause for eviction is limited to the lease term, usually a year, and the requirement that tenants be provided with 90-day notice of lease termination is suspended.¹⁰

"Mark-to-Market" demonstration program. The HUD appropriations act also authorizes the FHA Multifamily Demonstration first approved in the vetoed FY 1996 HUD appropriations measure (H.R. 2099).¹¹ The demonstration, limited to 15,000 units over the next two years, is designed to test approaches for restructuring the debt and subsidies on HUD-insured properties with project-based Section 8 in which current subsidized rents exceed the area fair market rents. Its results will be especially important if Congress fails to develop a separate portfolio restructuring policy later this year in the FY 1997 legislative process.

Transfer of project-based budget authority to other uses. The appropriations act allows HUD to transfer to other contracts any unexpended budget authority from terminated or unrenewed project-based Section 8 contracts.¹² This will permit the funds to be used for assisting eligible families, including formerly assisted tenants.

Single-Family Housing

Drastic reductions in assistance to homeowners facing foreclosure. The FHA Single-Family Assignment program, under which HUD provides assistance to families facing the loss of their homes as a result of divorce, job loss or other temporary setbacks, is changed virtually beyond recognition.¹³ Advocates have protested the changes to no avail, even though they will result in drastic reduction of benefits to homeowners in distress.

Fair Housing Enforcement to Remain with HUD

Congress deleted the provision that had been included in the vetoed FY 1996 Appropriations Act that would have transferred HUD's authority to enforce the Fair Housing Act to the Justice Department. It retained the two provisions that bar HUD from using anything but the March 1991 Keating Memorandum¹⁴ to decide whether a landlord's occupancy standards constitute discrimination against families with children and from using the Fair Housing Act to investigate individuals' otherwise lawful efforts to influence governmental officials' actions.

1. Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996 (hereafter "HUD appropriations act"), enacted as part of Pub. L. No. 104-134, 104th Cong., 2d Sess. (signed Apr. 26, 1996), 142 CONG. REC. H3911 (Apr. 25, 1996); H. CONF. REP. NO. 537, 104th Cong., 2d Sess. (Apr. 25, 1996). Pub. L. No. 104-134 is also known both as the Omnibus Appropriations Act for Fiscal Year 1996 and the Balanced Budget Downpayment Act II.
2. Pub. L. No. 104-19, Emergency Supplemental Appropriations for Additional Disaster Assistance for Anti-Terrorism Initiatives,for Assistance in the Recovery from the Tragedy That Occurred at Oklahoma City, and Rescissions Act, 1995, 104th Cong., 1st Sess. (July 19, 1995). See President Signs FY 1995 Rescission Compromise Package — Bad News for Housing, 25 HOUS. L. BULL. 131 (Aug. 1995).
3. Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996, supra note 1, § 201(a), enacted as part of Pub. L. No. 104-134, § 101(e).
4. Id. § 201(b).
5. Id. § 202.
6. Id. § 229.
7. Id. § 230.
8. H. REP. NO. 537, 104th Cong., 2d Sess. 535 (Apr. 25, 1996).
9. Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996, supra note 1, § 204.
10. Id. § 203.
11. Id. § 210. See also Conference Agreement Defers Fundamental Decisions on Project-Based Section 8, 25 HOUS. L. BULL. 205, 206 (Dec. 1995).
12. Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996, supra note 1, § 208.
13. Id. § 221.
14. For background and a summary of the Keating memorandum, see Revised Fair Housing Occupancy Guidelines Spark Controversy, 25 HOUS. L. BULL. 185 (Nov. 1995).