National Housing Law Project Housing Law Bulletin

Important Recent Developments Concerning Minimum Rents

Three-month blanket waiver granted. HUD has now issued a new notice to implement the waiver provision for Section 8 project-based assistance programs.⁵ The most important part of the Notice is that HUD has decided to grant a blanket waiver for all current tenants who would be charged the minimum rent. The waiver covers the months of July, August and September. For those three months, Section 8 landlords participating in the New Construction, Substantial Rehabilitation, State Housing Agency, Rural Housing (formerly FmHA), Loan Management Set-Aside and Property Disposition programs are not allowed to collect the $25 minimum rent from tenants to whom it would otherwise be applicable. The landlords are directed by the Notice to inform those tenants of that waiver. There is no requirement that the tenants demonstrate their individual hardship.

Bridging the gap. The waiver for July through August still leaves open the months of May and June, because May 1 had been HUD's implementation date for the Project-Based Section 8 programs.⁶ In this new Notice, HUD extended that implementation to June 1, for those landlords who had not been able to meet the May 1 deadline. In doing so, HUD recognized that landlords had not been granted sufficient time to receive the Notice from HUD and to implement the recertifications for the affected tenants. As a result, HUD decided it would not enforce the deadline against landlords who were not able to implement by May 1. If you are representing a tenant from whom a landlord is seeking to collect the minimum rent for May, this Notice should help to convince the landlord to relent.

For June, this Notice will not help on the implementation date. However, in April HUD issued a Notice for the Project-Based Section 8 programs, encouraging landlords to avoid evictions as a result of nonpayment of the minimum rent.⁷ In that Notice, HUD "strongly urge[d] owners to take action to ensure that families with severe hardships are not evicted specifically as a result of their inability to pay the new minimum rents."⁸ HUD encouraged landlords to conduct income verifications to determine the seriousness of tenants' hardship, exercising discretion to refrain from evictions and using alternative means of assistance, such as rescheduling rental payments, counseling families on the availability of homeless and welfare assistance, if any, to help with rental payments, and referring the families to the local service agencies or homeless assistance programs for rental assistance.

Bad news for applicants. For applicants, the HUD Notice does not have good news. It indicates that the waiver applies only to tenants in residence at the time the minimum rents were implemented at the project in question, i.e., either May 1 or June 1. Thus, if an applicant with little or no income was admitted before the landlord began implementation, the applicant would get the benefit of the waiver; but applicants who moved in later or who were rejected because of inability to pay the minimum rent would not get the waiver benefit.

After September, it is possible that minimum rents may not be such a severe problem. The provisions of the Balanced Budget Downpayment Act expire on September 30, 1996, the end of Fiscal Year 1996. If the minimum rent is to be extended into FY 1997, that will have to be done either by the FY 1997 Appropriations Act or an authorizing act. The FY 1997 appropriations bill reported out by the House Appropriations Committee makes the minimum rent optional with the PHA and with HUD.⁹ The Senate Authorizing Bill, S. 1260, does the same. Thus it is quite possible that any appropriations or authorization bill passed this year will at least make the minimum rent optional, not mandatory.

1. Minimum Rents: Issues and New Developments, 26 HOUS. L. BULL. 59 (May 1996).
2. Pub. L. No. 104-99, § 402(a), 110 Stat. 44 (Jan. 26, 1996).
3. Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996 (hereafter "HUD FY 1996 Appropriations Act"), § 230, enacted as part of Pub. L. No. 104-134 (known as the Omnibus Appropriations Act for Fiscal Year 1996 or the Balanced Budget Downpayment Act II), § 101(e), 110 Stat. 1321 (Apr. 26, 1996) (143 CONG. REC. H3920).
4. H.R. REP. NO. 538, 104th Cong., 2d Sess. (Apr. 25, 1996).
5. HUD Notice H 96-51 (HUD), "Clarification to Notice H-96-7 Implementing the January 26, 1996, Continuing Resolution and New Provisions of the April 26, 1996, Omnibus Appropriations Act Affecting the Administration of Multifamily Assisted Housing Programs" (issued June 12, 1996). The earlier notices were: HUD Notice PIH 96-6, "Administrative Provisions of the January 26, 1996, Continuing Resolution Affecting Public and Indian Housing Programs" (issued Feb. 13, 1996; expires Sept. 30, 1996); HUD Notice PIH 96-7, "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); HUD Notice CPD-96-03, "Tenant Rent Calculations for Certain HUD McKinney Act Programs" (issued Mar. 22, 1996); HUD Notice H 96-7, "January 26, 1996, Continuing Resolution Statutory Changes Affecting the Administration of Multifamily Assisted Housing Programs" (issued Mar. 15, 1996); and HUD Notice PIH 96-12, "Managing the Minimum Rent Requirements" (issued Mar. 21, 1996).
6. HUD Notice H 96-7, "January 26, 1996, Continuing Resolution Statutory Changes Affecting the Administration of Multifamily Assisted Housing Programs" (issued Mar. 15, 1996).
7. HUD Notice H 96-22, "Minimum Rents" (issued Apr. 16, 1996).
8. Id. at 1.
9. VA, HUD and Independent Agencies Appropriations Bill, FY 1997 (approved by the full House Appropriations Committee on June 13, 1996); H.R. REP. NO. 628, 104th Cong., 2d Sess. 40 (June 18, 1996); S. REP. NO. 195 (Dec. 20, 1995).