National Housing Law Project Housing Law Bulletin

House Public Housing Revisions Reported Out
and Passed on Floor—
HUD Also Finally Unveils Its Version

Targeting of assistance and community work requirements were among the most contentious issues as the full House Committee on Banking and Financial Services, reported legislation revising public housing to the full House by a vote of 28-19, primarily along party lines.¹ More than 60 amendments were considered either (1) as part of the so-called Manager's Amendment, which includes generally non-controversial items; (2) on an individual basis; or (3) as part of an en bloc amendment including items about which consensus was reached during the Committee's deliberations. During the course of the mark-up, HUD finally submitted its bill -- the Public Housing Management Reform Act of 1997 (PHMRA) -- to the Congress. The HUD bill was introduced by request by Chairman Lazio (R-NY), joined by Rep. Kennedy (D-MA).²

On the House side, the HUD bill, in substantially unaltered form, was offered as a Democratic substitute to H.R.2 during floor consideration. On the Senate side, some provisions of PHMRA have been integrated into S.462 which was reported out of the full Senate Committee on Banking, Housing and Urban Affairs on May 7.

With respect to overall funding, the Congressional Budget Office estimated the budgetary impact of H.R.2 as actually decreasing outlays from $25.0 billion in FY 1997 to $17.6 billion in 2002.³ In recognition of the tremendous pressures placed on the housing budget by the need to fund Section 8 contract renewals, the Committee adopted a bipartisan proposal authorizing the recapture of PHAs' Section 8 reserves for use for that purpose if the Secretary so determines.⁴

Mark-up in the full House Banking Committee was completed on April 23. On May 14, H.R.2 itself was passed by the House on a vote of 293-132. HUD' bill, with some slight modifications, was offered by Rep. Kennedy as a substitute, but it was defeated by a vote of 261-163. Some of the major changes in H.R.2 are outlined below. Variations introduced by HUD's proposal are also noted.

Targeting

A significant change to H.R.2's original targeting provisions was included in the Manager's Amendment. As introduced in January, the measure targeted only 35 percent of public housing units to families with incomes 30 percent of area median and below, with the remainder available to households with incomes up to 80 percent of median. For Section 8, only 40 percent of the assistance would be targeted to the lowest income families. Had the original version been reported, the adverse impact of these low targets for the poorest households would have been compounded by the bill's authorizing PHAs to meet their targets on a "profile" basis. The Manager's Amendment abandoned profile targeting in favor of a "fungibility" feature. Promoted by the Council of Large Public Housing Authorities (CLPHA) during conference negotiations on last year's public housing legislation, fungibility permits PHAs to essentially trade reduced targeting to poor families in the conventional public housing program for increased targeting to those families in the Section 8 program.⁵

The Committee Report observes that the fungibility feature was added as a response to criticisms that "profile targeting" would have excluded the poorest families from admission to public housing for several years. However, the Report makes clear that "fungibility" is considered a means to address the Committee's desire to foster mixed-income developments. The Report states, . . . PHAs should be given the flexibility to offset public housing targeting with higher levels of choice-based targeting. In this manner, a PHA that needs to create mixed-income developments will have increased flexibility to do so, as long as they provide additional resources to the poorest in their choice-based housing program.⁶

HUD's bill would target 40 percent of the public housing units on an admissions basis to families with incomes below 30 percent of area median. Ninety percent of all units would have to serve those below 60 percent of median. On a development-by-development basis, 40 percent of public housing units would be required to serve the poorest households. HUD continues to advocate strongly in favor of targeting Section 8 assistance to those most in need, proposing that 75 percent of the certificates and vouchers that become available go to families with incomes at 30 percent of median and below. HUD states in its section-by-section analysis that concerns about concentration of poverty lose credence in the context of the tenant-based program that is founded on principles of resident mobility and choice. HUD believes deeper targeting in the Section 8 program will serve as a proxy for limitations on eligibility for assistance that was once provided by the now suspended federal preferences. Finally, the proposed deeper targeting in HUD's view will promote portability among "families most in need of greater mobility and housing choices."⁷

The Manager's Amendment revises the provision authorizing public housing authorities (PHAs) to use site-based waiting lists to ensure applicability of Title VI of the Civil Rights Act of 1964, the Fair Housing Act and other federal civil rights laws.⁸ HUD also favors authorizing PHAs to establish site-based waiting lists as a means to promote housing choice and thus to encourage the admission or retention of working families.⁹

On the House floor, amendments by Rep. Kennedy to provide deeper targeting for both the public housing and Section 8 programs were rejected on voice votes.¹⁰ An amendment by Rep. Moran to introduce time limits into housing assistance was withdrawn. The amendment would have allowed PHAs with waiting lists of a year or more to create a five-year limitation on residence in public housing, excepting families in which a member is working, elderly or disabled.

Community Work and Family Self-Sufficiency Requirements

One of the most widely discussed issues during mark-up was the requirement that all adult members of households receiving public housing or Section 8 assistance "volunteer" eight hours monthly for service within the community in which they reside. According to the Committee Report, the requirement stems from ". . . the beliefs inherent in this legislation that Federal housing assistance should be temporary assistance allowing a family to advance economically toward self-sufficiency, that there is a duty on a recipient of assistance to pursue vigorously self-sufficiency efforts, and that each recipient bears a responsibility to contribute something toward the improvement of their community as a means of giving something back for this assistance."¹¹ Critics of this requirement maintain that no such mandatory volunteerism is required of other recipients of the federal government's largesse, such as homeowners who receive generous federal tax subsidies on their mortgage payments.

Several exemptions from the work requirement are set out, including exemptions for the elderly and disabled, and those working or in training programs or other economic self-sufficiency activities as required under the welfare programs. Those otherwise physically unable to comply, as certified by a physician, would also be exempt from the community work requirements. The Manager's Amendment clarified that no "employment relationship" between the "volunteer" and the PHA is created as a result of the work requirement, thus exempting PHAs from liability in connection with residents' compliance with the requirement.

The measure also requires that, as a condition of occupancy, each family receiving public housing or Section 8 assistance agree to a target date for graduation from or termination of that assistance. The elderly and disabled are exempted from establishing a target graduation date. Moreover, failure by a resident to meet the target date is not grounds for eviction.

Attempts failed by Reps. Watt, Frank (D-MA) and Jackson (D-IL) to delete the community work requirement, to make it discretionary with the PHAs, or to otherwise moderate it. These attempts included rejection during floor consideration of amendments by Rep. Jackson to bar a PHA from evicting a family exclusively for failure to meet its community work requirements, as well as an attempt to expand exemptions from the community work requirements to single parents, grandparents and other who are the primary caregivers of children under six or who are elderly or disabled persons.¹² Similarly rejected along party lines were an amendment by Rep. Frank to make the compliance with the community work requirement optional for PHAs, and another by Rep. Watt to require minimum wage compensation for residents meeting the requirement.¹³

The HUD bill, while silent on the graduation date, contains a volunteer requirement with exemptions for the elderly and disabled, persons either in school or training or working 20 hours a week or otherwise fulfilling educational requirements for receipt of welfare benefits. Certain primary caretakers of children under six, the elderly or persons with disabilities would also be exempt under HUD's bill, as would families being assisted under the Temporary Assistance for Needy Families (TANF) program.¹⁴

Welfare Sanctions

The Manager's Amendment also included a provision on welfare sanctions to provide that a person sanctioned by a local welfare agency -- not for coming up against welfare time limits, but for other non-compliance -- is not entitled to a rent decrease if he or she loses income as a result of that welfare sanction.¹⁵ An amendment offered by Rep. Watt (D-NC) and adopted on a voice vote clarifies that, for purposes of determining a family's tenancy or income, the PHA must consider any decrease in income resulting from benefit reductions if the family has complied with the conditions for receiving assistance but has been unable to find work despite such compliance. The purpose of this amendment is to attempt to extend protections to persons making good faith efforts to comply with the requirements of local benefit programs.

Rents

Rep. Kennedy's amendment to increase PHAs' operating subsidies by $300 million, from the $2.9 billion appropriated for the current fiscal year, was resoundingly rejected. The higher $3.2 billion figure would have been closer to the amount PHAs assert is necessary to meet their operating needs. Chairman Lazio asserted on the House floor that not every problem experienced by PHAs in serving the very poor and working poor families is related to underfunding of housing authorities.¹⁶

No changes were made in the rent provision of H.R.2 that requires tenants to choose either the Brooke Amendment protections capping rent at 30 percent of their adjusted incomes or a flat-rent option, with the PHA setting the rent based upon the rental value of the unit, but no more than actual monthly operating costs.¹⁷ The Committee Report rationalizes the rent option as "essentially. . . a requirement that PHAs establish a ceiling rent for each unit." The Report sees the income-based/flat-rent option as empowering residents and as beginning "the process by which they start thinking of real estate in similar market terms as the private sector." The Report goes on to offer the Committee's belief that the flat-rent requirement would demand of PHAs behavior "more like true property managers by inserting a pricing mechanism into the public housing system."¹⁸

The Manager's Amendment clarifies that the restriction on flat rents exceeding actual monthly costs is not intended to keep PHAs from other methods of developing flat rents.¹⁹ The HUD bill, which formed the basis for the Democratic substitute, does not include the flat-rent option. The en bloc amendment also included a provision by Rep. Roybal-Allard (D-CA) that mandates that PHAs switch a tenant's rent to an income-based rent if the tenant previously opted for a flat rent and subsequently experienced financial hardship.

Not unexpectedly, during floor consideration Rep. Frank's amendment to retain the Brooke Amendment as an automatic cap was rejected along party lines.²⁰ Several failed efforts in the full committee mark-up to moderate the minimum-rent provisions were offered on the House floor. These included an amendment by Rep. Velazquez (D-NY) to cap minimum rents at $25 rather than the $50 in H.R.2, and to permit HUD to establish hardship exemptions. However, an amendment by Rep. Sanders (I-VT) to require PHAs to include the cost of utilities when calculating the minimum rent of a public housing tenant was adopted as part of the en bloc amendments. In addition, although amendments by Rep. Vento (D-MN) to exempt legal aliens who lose benefits from the minimum-rent requirements failed in committee, the en bloc amendment extended minimum-rent hardship exemptions to families, including legal aliens, who would have received public benefits but for welfare reform.²¹

Home Rule Flexible Grant Option

The Committee Report decries the idea of Washington-based solutions and supports a "balance . . . between the need to grant localities great flexibility while maintaining the Federal commitment to housing and ensuring that taxpayers dollars are used as effectively as possible for the purposes intended." The Home Rule Flexible Grant is viewed as offering "local government leaders the option to combine Federal housing assistance into a flexible seamless grant for use in meeting the housing needs of their communities." The hallmark of the grant is "administrative flexibility from Federal rules and regulations." Although HUD approval of local housing plans would be required, local jurisdictions could expect to receive the same level of funding as under the alternative categorical housing programs.²²

This mega-block grant of all public housing and Section 8 funds to local governments and municipalities to provide low-income housing assistance underwent administrative changes in the Manager's Amendment. These include changes to assure the management capacity of an applicant jurisdiction to operate housing programs and to require a demonstration that the jurisdiction's operational plan will not lead to excessive duplication of administrative efforts and expenses.²³ During committee mark-up Rep. Kennedy's amendment to strike the block grant altogether was defeated by a vote of 29-19, following a brief debate in which Rep. Kennedy characterized the grant as an abdication of the Committee's responsibilities and surrender of protections for the lowest income people. Chairman Lazio countered that the Home Rule Flexible Grant encourages the involvement of mayors and officials at the local level who are better positioned to assess local needs. Rep. Kennedy repeated his amendment to strike the Home Rule Flexible Grant on the house floor but it was defeated on a voice vote.²⁴

The technical Manager's Amendment offered on the House floor revises the Home Rule Flexible Grant to provide rent protections for recipients of housing assistance and to require unemployed tenants to perform community service work.²⁵ This change originated in debate during mark-up in which Rep. Frank questioned whether the Chairman would impose the same requirements on the higher income, prospective tenants in Home Rule Flexible Block Grant programs as imposed on public housing and Section 8 residents. The block grant was also modified to target assistance as provided in H.R.2 for public and assisted housing and to mandate HUD disclosure of reasons underlying approval or rejection of a local plan.

Lease Terms and Grievance Procedure

During mark-up, Rep. Watt sponsored amendments that were included in the en bloc amendment to delete the provision in H.R.2 that would have allowed a PHA or owner to terminate a tenancy for activities engaged in by "any other persons under the control of any member of the household," as well as the provision allowing a tenant to be evicted for criminal conduct by the tenant, family member or guest "on or off the premises." The Watt amendment substituted "in the immediate vicinity of the premises." The effect of this change would be to restore the law in effect prior to adoption of the Housing Opportunity Extension Act.²⁶

The HUD bill and Democratic substitute do not include this significant restoration of tenant protections. Included in the accepted floor amendments was a provision by Rep. Waters (D-CA) on the exclusion of evictions from the grievance procedure. Evictions could continue without the grievance process in situations involving threats to health or safety or for drug-related criminal activity on or off the premises. For evictions in other instances, residents would have five days following notice of eviction to request an administrative grievance procedure. The PHA would then have 30 days to take final action on the grievance. The PHA's failure to take action within 30 days would result in voiding the eviction.²⁷

Demolition, Disposition and Mandatory and Voluntary Conversion of Public Housing

Although no fundamental changes were made to these provisions in the Manager's Amendment, tenants will be helped by provisions in the en bloc amendment sponsored by Rep. Gutierrez (D-IL) which require notification and relocation assistance for tenants affected by demolition and disposition of developments and voluntary conversion of public housing to tenant-based assistance, as well as consultation with residents before conversion.

Occupancy Standards

The Committee Report notes that the provision prohibiting HUD from establishing a national occupancy standard, but creating a presumptive two-person-per-bedroom standard for both private and public housing where states have not acted, arose as a result of HUD attempts to mandate that owners house "substantially more people than is widely considered appropriate and reasonable." Despite widespread owner support for the provision during mark-up, an amendment by Rep. Watt was approved to strike the provision creating the "default" two-person-per-bedroom national occupancy standard. A floor amendment to restore the provision was not offered by the original sponsor, Rep. McCollum (R-FL).

Process

With final floor approval having occurred in the House, the action now shifts to the Senate. It is expected to take up its bill in early June. This paves the way for a possible conference before the August recess.

1. H.R.2, Housing Opportunity and Responsibility Act of 1997. Marked up in the House Committee on Banking and Financial Services (hereafter House Banking Committee) on April 16, 17 and 23, 1997. For background on H.R.2 as introduced, see House Introduces Low-Income Housing Program Changes, 27 HOUS. L. BULL. 1 (Jan. 1997). See also attachment to Manager's Amendment to H.R.2, "Amendment to H.R.2 offered by Mr. Lazio" (Apr. 15, 1997), at 35; H.R. REP. NO. 76, 105th Cong., 1st Sess. (Apr. 25, 1997), and Supplemental Report (Apr. 29, 1997).
2. H.R. 1447, Public Housing Management Reform Act of 1997 (Apr. 24, 1997) (hereafter, PHMRA). Although the measure was transmitted on April 18, 1997, to Vice President Gore as President of the Senate, as of press time it had not been formally introduced in the Senate.
3. H.R. REP. NO. 76, 105th Cong., 1st Sess., Supplemental Report (Apr. 29, 1997), at 2.
4. H.R.2, ' 308.
5. Manager's Amendment, at 16, lines 7-19, and at 17, lines 1-3.
6. H.R. REP. NO. 76, supra note 1, at 110.
7. HUD, Section-by-Section Analysis of Public Housing Management Reform Act of 1997, p. 24 (hereafter "HUD Section-by-Section Analysis").
8. Manager's Amendment, at 17, lines 4-6, amending H.R.2, at 87, line 14.
9. PHMRA, ' 110, at 28; HUD Section-by-Section Analysis, at 11.
10. 143 CONG. REC. H2233 (May 6, 1997); id. at H2405 (May 7, 1997).
11. H.R. REP. NO. 76, supra note 1, at 103.
12. 143 CONG. REC. H2148-49 (May 1, 1997).
13. Id. at H2209-10 (May 6, 1997).
14. PHMRA, supra note 2, ' 111, at 29.
15. H.R. REP. NO. 76, supra note 1, at 104.
16. 143 CONG. REC. H2233 and H2240 (May 6, 1997).
17. H.R.2, ' 225(b), at 88-89.
18. H.R. REP. NO. 76, supra note 2, at 100-101.
19. Manager's Amendment, at 17.
20. 143 CONG. REC. H2265 (May 7, 1997).
21. Id. at H2189 (May 6, 1997).
22. H.R. REP. NO. 76, supra note 2, at 111.
23. Manager's Amendment, at 19-22.
24. 143 CONG. REC. H2412 (May 8, 1997).
25. Id. at H2122 (May 1, 1997).
26. Pub. L. No. 104-120, ' 9, 110 Stat. 834 (Mar. 28, 1996).
27. 143 CONG. REC. H2211 (May 6, 1997).