National Housing Law Project Housing Law Bulletin

NAHRO’s Tenant-Based Rental Assistance Reform Act of 1995

The National Association of Housing and Redevelopment Officials (NAHRO) has proposed a bill to make major revisions to the HUD tenant-based assistance programs.¹ The bill is generally the same as the narrative description NAHRO unveiled in March.² The approach is to greatly expand each local housing agency's (LHA) discretion to decide how to run its own program. In the process of conferring that discretion, the bill would eliminate most of the statutory provisions that create rights for certificate and voucher holders.

In summary, NAHRO's bill would consolidate all HUD's tenant-based assistance programs into a single program. That would include the certificate and voucher programs, as well as the Section 8 for the single-room occupancy (SRO) program and the tenant-based assistance components of the HOME and Shelter Plus Care programs. The new program would be administered locally by local housing agencies and, in limited circumstances, state housing agencies. Each agency would be guaranteed a portion of the appropriated funds, allocated by a HUD formula, and would have wide discretion to decide how to spend it.

The agency's decisions would have to be embodied in a plan to be developed after a public hearing and submitted to HUD for limited review. The agency's plan would set policies on participant eligibility and selection, frequency of eligibility reviews, set-asides, subsidy levels, tenant contributions, eligible types of housing and landlords, portability, if any, and security deposits, damages and vacancy payments. Federal law would impose very few constraints on the local agencies' choices. At the same time, the current statutory provisions that create rights for tenants and applicants would be repealed. Many of these changes are attractive to some members of Congress and may very well be enacted.

Who Would Be Assisted?

Following the doctrine that local governments know best how to meet the housing needs of their residents, NAHRO's bill would grant LHAs much more flexibility in deciding who should receive assistance. That flexibility would include much higher income limits, the repeal of federally mandated preferences, the creation of unlimited discretion to establish local preferences, the elimination of federally mandated set-asides for particular groups, along with LHA discretion to establish set-asides of its own and the power to define local eligibility requirements.

Income limits

Now, nearly all applicants for certificates and vouchers must have incomes at or under 50 percent of the area's median income for their size family.³ Under NAHRO's bill, the income limit would be raised to 80 percent of the median income for the area.⁴ In contrast, under HUD's bill, 50 percent of the median income, or 60 percent in the case of homeowners, would be the limit for the certificate program.⁵ The only exceptions in HUD's bill would be for higher income residents of public or assisted housing developments being converted to certificates.

Eligibility

Beyond the 80 percent of median income limit, there would be no federally prescribed requirements. Instead, the LHA would be free to establish whatever eligibility requirements it wanted.⁶ Thus, an LHA could decide to provide assistance only to households that have at least one employed member, or that are all elderly or disabled, or that meet any other criteria that the PHAs deem relevant. Residency requirements also would appear allowable under this provision.

Preferences

Set-asides for particular groups

Federal law now creates certain special certificate and voucher programs for different groups of people. Examples would be the Family Unification program and programs for people who are homeless. NAHRO's bill would prohibit any such federally created set-asides.¹⁰ Instead, the PHA would be given the discretion to create set-asides of its certificates for Family Self-Sufficiency program participants, for families with children in danger of being placed in foster care, or for specific groups of people, such as the elderly, people with disabilities, homeless people or families with children.¹¹

Grounds for denial

NAHRO's bill expressly sets out federal rules specifying the grounds for denying applicants assistance. They are that the applicant (1) be ineligible; (2) have breached a previous contract of participation with that or another local agency; (3) have committed fraud in any housing program; (4) have engaged in drug-related or violent criminal activity; (5) have failed to supply needed information; (6) have failed to comply with program requirements; or (7) have failed on other grounds set or approved by HUD.¹² The bill explicitly fails to create hearing requirements for rejected applicants.¹³

How Much Would Tenants Pay?

Whether the tenant-based assistance program will work well for poor people depends, in part, upon the level of assistance that is provided. Under NAHRO's bill, as with the other tenant-based programs, the level of assistance depends upon the relationship between the rents the landlords will be allowed to charge, the portion that will be covered by the subsidy and the portion to be covered by the tenants.

Fair market rents and payment standards

For the current certificate and voucher programs, HUD sets fair market rents (FMRs) that dictate the maximum amount of rent that may be subsidized. With vouchers, public housing authorities (PHAs) are allowed to set a payment standard below the FMR that limits even further the amount of rent that may be subsidized. The Brooke Amendment¹⁴ sets the tenant's contribution at 30 percent of adjusted income for the certificate program and, for the voucher program, at 30 percent plus any amount that the landlord charges above the payment standard.

NAHRO's bill, true to its devolution agenda, would eliminate HUD's role in setting fair market rents. Instead, the LHAs would have the power to set maximum monthly subsidy payment levels and tenant contribution levels. Following the flexibility mantra, LHAs would also be free to set different subsidy levels and tenant contribution levels for different types of subsidy programs, different geographical areas and different categories of tenants.¹⁵ There would be no federal law dictating the maximum or minimum level of the tenant's contribution. The Brooke amendment would be repealed. To the extent that the PHA decided to base rents upon income, it would be empowered to define what is income and which, if any, adjustments would be allowed.¹⁶ LHAs could allow landlords to charge tenants more than the payment levels they set.

Rent reasonableness

LHAs would be mandated by federal law to determine whether the rent proposed to be charged by the landlord was reasonable. If not, the LHA would be allowed to disapprove the lease, but it would not be required to do so.¹⁷

Where Could Tenants Use the Assistance?

One measure of the success of a tenant-based assistance program is the extent to which participants have a wider choice of housing and neighborhoods in which to live. How wide that choice actually is would be influenced by a variety of factors. They include: (1) the geographical breadth of the jurisdiction of the administering agency, (2) the portability rights of participants to use their certificates, (3) the agency's duty to assist participants in locating landlords who will accept certificates, (4) the freedom of landlords to reject applicants, (5) the eligible types of landlords and housing, and (6) the impact of housing quality standards on the supply of qualifying housing.

Administering entities' jurisdiction and portability

The administering agencies for this tenant-based program would be local housing agencies, i.e., govern mental units that are authorized to assist low-income housing.¹⁸ For the most part they are the public housing agencies that make up NAHRO's membership. Consortia of such agencies could also be funded. State agencies would be eligible only if they were administering certificates or vouchers, or one of the other consolidated rental assistance programs, before enactment.¹⁹ If there were no LHA willing and able to operate in an area, HUD would be able to operate the program there or fund a nonprofit to do so.²⁰

The local housing agency would have discretion to limit use of its assistance to its jurisdiction. It would be allowed, but not compelled, to permit participants to use their assistance outside the area of its jurisdiction under the portability option. Thus, participants' current portability rights would be repealed.²¹ If it did set up a portability program, the LHA could design it however it wished.²²

Assistance in finding landlords

Landlords' power to reject applicants

Eligible types of landlords

Eligible types of housing

LHAs are also given the option to assist specified types of housing, including SROs, shared housing, mobile homes, and project-based housing.²⁹ Whether to assist any or all of those kinds of housing is up to each LHA.

Housing quality standards

Homeownership

How Could Tenants' Assistance Be Taken Away?

The greater flexibility for LHAs promoted by the NAHRO bill also leads to greater possibilities for participants to lose their subsidies and their homes.

Evictions

By giving landlords greater freedom to evict, the NAHRO bill would increase the frequency that participants not only lose their homes but also find themselves unable to secure alternative housing in which to use their assistance. NAHRO's bill does not go as far as HUD's, which requires PHAs to terminate the assistance of participants who are evicted for serious lease violations.³⁷

Eligibility reviews

Grounds for termination

Hearings

Time limits

Private Rights of Action

As if repealing most of the tenants' rights were not enough, NAHRO's revisions to the United States Housing Act would expressly deny tenants and applicants any private right of action to enforce any of the Act's provisions.⁴⁴ The language of the bill expressly states that the United States Housing Act does not confer on any person or organization a right of action in any court to enforce any provision of the act. Only HUD and the LHAs would have such rights to sue. Tenants and applicants would be denied rights even as third-party beneficiaries to enforce contracts between HUD and the LHAs or between LHAs and landlords.

1. NAHRO, Tenant-Based Rental Assistance Reform Act of 1995 (May 1995). The citations below, unless otherwise specified, are to NAHRO's bill and are identified as sections of the Tenant-Based Rental Assistance Reform Act.
2. NAHRO, No Longer Business as Usual: "At a Glance" (Mar. 1995); NAHRO, No Longer Business as Usual: "Detailed Analysis" (Mar. 1995).
3. 42 U.S.C.A. § 1437n (West 1995).
4. Sections 3(a)(1) and (b)(17) of the United States Housing Act, as rewritten by Section 4(b) of the Public Housing Reform Act of 1995 (May 1995), another bill proposed by NAHRO for 1995.
5. HUD, American Community Partnerships Act, § 183(5) (May 1995).
6. Section 8(f)(2)(i) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Act, supra note 1.
7. 42 U.S.C.A. § 1437f(d)(1)(A) (West 1995).
8. Section 6(a)(2) of the United States Housing Act, as rewritten by Section 4(e) of the Public Housing Reform Act, supra note 4.
9. HUD, The American Community Partnerships Act, supra note 5, § 187(a).
10. Section 8(c)(4) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
11. Sections 8(e)(3)(4) and (5) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
12. Section 8(d)(6) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
13. Compare Section 8(d)(6) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, with Section 8(d)(8) of the United States Housing Act, 42 U.S.C.A. § 1437f(d)(8) (West 1995).
14. 42 U.S.C.A. § 1437a (West 1995).
15. Section 8(d)(1) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
16. Section 3(b)(10) of the United States Housing Act, as rewritten by Section 4(b) of the Public Housing Reform Act, supra note 4.
17. Section 8(d)(2) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
18. Section 3(b)(15) of the United States Housing Act, as rewritten by Section 4(b) of the Public Housing Reform Act, supra note 4.
19. Section 8(a) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
20. Id.
21. Compare 42 U.S.C.A. § 1437f(r) (West 1995).
22. Section 8(e)(2) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
23. Section 8(b)(6) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
24. 42 U.S.C.A. § 1437f(t) (West 1995).
25. HUD, The American Community Partnerships Act, supra note 5, § 187(c) (May 1995).
26. Section 8(c)(2) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
27. Section 8(c)(3)(C) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
28. Section 8(c)(3) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
29. Section 8(e) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Act.
30. Section 8(c)(3)(A) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Act.
31. Id.
32. Section 8(g)(2) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Act.
33. Section 8(e)(11) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
34. 42 U.S.C.A. § 1437f(y) (West 1995).
35. Id. §§ 1437f(c)(9) and (d)(1)(B).
36. Section 8(d)(9) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
37. HUD, The American Community Partnerships Act, § 188(a), supra note 5.
38. Section 8(f)(2)(i) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
39. Section 8(d)(7) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act, supra note 1.
40. Section 8(d)(8) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
41. Section 8(d)(6) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
42. Section 8(e)(1) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
43. Section 8(d)(5) of the United States Housing Act, as rewritten by Section 5 of the Tenant-Based Rental Assistance Reform Act.
44. Section 25 of the United States Housing Act, as rewritten by Section 4(s) of the Public Housing Reform Act, supra note 4.