National Housing Law Project Housing Law Bulletin

Certificate and Voucher Merger Regulations Finally Published

On July 3, 1995, HUD finally published the regulations that will merge the certificate and voucher programs in all respects except where the differences are mandated by statute.¹ The proposed regulations had been drafted under the prior administration and published for comment on February 24, 1993.² Issuance of the final regulations was deferred during 1993 and 1994, as HUD waited for Congress to amend the statute and consolidate the two programs. The only exception to the delay was the part on eligibility and participant selection, which was finalized in 1994 with the other admissions regulations for the project-based and public housing programs.³ When Congress failed to act in 1994, HUD started finalizing the proposed regulations as much as possible in the absence of statutory consolidation. The effective date for these final regulations will be announced by HUD, most likely before September 1, 1995.

The regulations continue many of the existing rules for the certificate and voucher programs without change, and those provisions will not be discussed here. There are, however, many major changes, including ones that:

• prescribe new grounds for rejecting applicants;
• make the tolling doctrine discretionary;
• allow PHAs to inform prospective landlords about applicants;
• make certain landlords ineligible for the program;
• modify the portability rules;
• change security deposits and eliminate landlord damage claims and vacancy payments;
• provide subsidy retention policies to handle family break-ups;
• create tenant liability for tenant-caused Housing Quality Standard violations;
• eliminate the requirement that leases have indefinite terms;
• implement the 90-day notice statute;
• create new grounds for subsidy terminations, including violating the lease and being absent from the unit; and
• abandon the distinction between grounds for rejecting applicants and for terminating participants.

As with the eligibility and participant selection rules of last year, these final rules tend to reduce federal regulation, confer more discretion on the PHAs, eliminate applicants' and tenants' rights and allow PHAs to regulate participants more closely.

1. Participant Selection (24 C.F.R. § 982.552, 60 Fed. Reg. 34,714; Introductory Comments at 60 Fed. Reg. 34,687-90)

These new regulations have very little to say about eligibility, waiting lists, preferences or other admissions issues, since those were covered by the regulations issued last year.⁴ However, they do establish new grounds for rejecting applicants. The new regulations specify the following grounds for denying assistance:

• violation of tenant's obligations;
• previous eviction from public housing;
• previous termination from the certificate or voucher program;
• drug-related or violent criminal activity;
• fraud or other criminal action connected with any federal housing program;
• owed rent or other amounts to any PHA in connection with Section 8 or public housing;
• failure to reimburse any PHA for amounts paid to an owner for amounts owed by the family;
• breach of repayment agreement;
• failure to comply with a Family Self-Sufficiency program agreement, without good cause; or
• violent or abusive behavior toward PHA personnel.

24 C.F.R. § 982.552, 60 Fed. Reg. 34,714. Three new grounds for rejection are (1) previous eviction from public housing, (2) prior termination from the certificate or voucher program, and (3) violent or abusive behavior toward PHA personnel.

The major expansion of the grounds for denying assistance comes from the broadening of the family's program obligations, breach of which is the first specified ground for rejection. The family's program obligations are:

• to provide information about citizenship or immigration status;
• to cooperate in recertification;
• to cause no Housing Quality Standards violation;
• to allow PHA inspections;
• to commit no serious or repeated lease violations;
• to notify the PHA before vacating unit;
• to give the PHA a copy of any eviction notice;
• to use the unit only as its sole residence;
• to notify the PHA of the birth, adoption or custody award of a child;
• to request PHA approval of any other addition to the family;
• to notify the PHA if any family member moves out;
• to not sublease;
• to not assign or transfer the unit;
• to notify the PHA of any absences and cooperate with the PHA regarding absences;
• to have no ownership interest in unit;
• to commit no fraud;
• to receive no duplicative subsidy; and
• to not engage in drug-related or violent criminal activity.

24 C.F.R. § 982.551, 60 Fed. Reg. 34,714. These grounds are more numerous and more detailed than the pre-1995 grounds.

These regulatory changes raise the question whether the PHA may reject an applicant for a subsidy because of the applicant's likely suitability as a tenant. Under the July 1994 regulations and HUD's previous policies, suitability as a tenant was never a per se grounds for rejection.⁵ The 1994 regulations have not been repealed. However, under the new regulations, the PHA may deny vouchers and certificates to applicants who have been evicted from public housing and to previous participants who have committed serious or repeated violations of their leases or caused HQS violations.⁶ To that extent, at least, suitability as a tenant has become a relevant participant selection factor.

2. Briefing the Family (24 C.F.R. § 982.301, 60 Fed. Reg. 34,702; Introductory Comments at 60 Fed. Reg. 34,667-68)

The duties of the PHA to explain the program to the family remain generally the same as in the past. Some items will not have to be covered orally anymore, such as the Housing Quality Standards. Portability must also be explained in the briefing. If the participant lives in a high-poverty census tract — not defined in these regulations (see 24 C.F.R. § 892.4, 60 Fed. Reg. 34,696) — the briefing must include an explanation of the advantages of moving to a lower poverty census tract. The PHA must also give the participant a list of landlords who will participate and others who entities that will help the certificate or voucher holder find a unit; but the PHA may not discourage a family from living where it chooses.

The packet of information that the PHA gives to the certificate or voucher holder must include, among other things, an explanation of the PHA's policy of informing prospective landlords about the family, a copy of a housing discrimination complaint form, a list of participating landlords, and the grounds for terminating the participant's subsidy.⁷

3. Finding Housing to Rent

a. Search Time and Tolling (24 C.F.R. §§ 982.302 and 982.303, 60 Fed. Reg. 34,702-03; Introductory Comments at 60 Fed. Reg. 34,669-70)

The final rule continues the present policy that PHAs must allow participants 60 days to look for a place and may extend that time up to a maximum of 120 days. In individual cases, if a person with a disability requests an extension beyond the 120-day limit, the HUD office will have the power to waive the limit as a reasonable accommodation.

The final rule does not require PHAs to toll running of the 60- and 120-day periods while requests for lease approval are pending at the PHA. Instead, it authorizes PHAs to adopt a policy on that matter and to include that policy in their administrative plans. If a PHA elects not to allow tolling at all, or in specific cases, the regulations leave the 60- and 120-day periods running.⁸

b. Providing Landlords Information About Prospective Tenants (24 C.F.R. § 982.307, 60 Fed. Reg. 34,703; Introductory Comments at 60 Fed. Reg. 34,668-69)

Unlike the proposed rule, the final rule does not require the PHA to give landlords any information about the prospective tenant, except the family's present address and the names of the current and prior landlords. However, the final rule will allow the PHA, if it wishes, to provide more information about the tenant's previous history as a tenant.⁹ If a PHA decides to provide information to the landlord about a prospective tenant, the PHA must inform the applicant in the briefing that it will be doing so. It must include that policy in its administrative plan. In addition, it must follow the same practice for all participants and all landlords.¹⁰ The PHA must also encourage landlords to screen prospective tenants and must inform landlords that the PHA has not screened them.

c. Encouraging Owners to Participate (24 C.F.R. §§ 982.153(b)(1)-(6), 60 Fed. Reg. 34,700; Introductory Comments at 60 Fed. Reg. 34,666)

In itemizing the PHAs' responsibilities, the new regulations include some limited obligations for the PHAs to expand program participants' opportunities to find a place to live. They must publish information about the program, explain the program to landlords, seek expanded opportunities for families to live outside areas of poverty or racial concentration, encourage owners to make units available, affirmatively further fair housing, and make efforts to help people with disabilities find satisfactory housing.¹¹ In addition, if a family claims that it has been discriminated against, the PHA must inform the family about how to fill out and file a discrimination complaint.¹² These duties, however, fall far short of what HUD officials aggressively committed to making the tenant-based program work for all participants might have prescribed.

d. Landlord Discrimination Against Certificate and Voucher Holders (24 C.F.R. § 982.457, 60 Fed. Reg. 34,714)

Under 42 U.S.C. § 1437f(t), landlords with Section 8 contracts for some units cannot refuse to rent vacant units to certificate or voucher holders because of their status as certificate or voucher holders. In the new regulations, HUD does state that that section provides that owners who have entered into a Housing Assistance Payments (HAP) contract may not refuse to rent to certificate or voucher holders merely because they are certificate or voucher holders.¹³ All HUD does is repeat the statutory language without interpreting it in any fashion.

There are other statutes that prohibit particular landlords from discriminating against certificate and voucher holders.¹⁴ In addition, 12 U.S.C. § 1715z-1(b)(2) provides that landlords of certain subsidized projects may not interfere with tenants' efforts to obtain rent subsidies. HUD's new regulations do not mention those non-discrimination duties.¹⁵

e. Ineligible Landlords — Disapproval of Owners (24 C.F.R. § 982.306, 60 Fed. Reg. 34,703; Introductory Comments at 60 Fed. Reg. 34,670-72)

If the PHA knows that a prospective landlord has been debarred by HUD, the PHA cannot approve a unit owned by that landlord. If a landlord is subject to fair housing enforcement actions by HUD and HUD directs the PHA not to contract with that landlord, the PHA must reject that landlord's units. The rule gives the PHA discretion to reject other categories of landlords, but does not require their rejection, including landlords who are delinquent in paying state and local real estate taxes, those who have committed fraud or other crimes related to any federal housing program, those with a history of HQS violations, and those who are drug dealers.

f. Portability (24 C.F.R. §§ 982.353 - 982.355, 60 Fed. Reg. 34,707-08; Introductory Comments at 60 Fed. Reg. 34,679-80)

Under 42 U.S.C. § 1437f(r), certificates and vouchers may be used anywhere within a PHA's state or its Metropolitan Statistical Area (MSA) or any contiguous MSA, even if that area is outside a PHA's jurisdiction. A 1992 amendment requires applicants who did not live within the PHA's jurisdiction when they applied to use the voucher or certificate within the PHA's jurisdiction for at least 12 months before exercising these portability rights.¹⁶

HUD's new regulations implement that statutory provision and make both certificates and vouchers useable anywhere in the same state, the same MSA, a contiguous MSA, or anywhere else in the United States that some PHA operates.¹⁷ If the head of the family or the spouse of that person did not have his or her domicile within the jurisdiction of the PHA at the time of application, the family has no automatic right to use the certificate or voucher outside the PHA's jurisdiction during the first 12 months. However, if the PHA and the PHA operating where the family wishes to locate agree, the family may move sooner.¹⁸

The regulations spell out more details about how the portability procedures will operate. One significant change concerns the definition of jurisdiction.¹⁹ HUD previously defined a PHA's jurisdiction as being any area where it was not barred from operating. That negative formulation meant that a PHA's jurisdiction might be wider than otherwise thought. These regulations change the definition to be the area where the PHA is authorized to operate. That affirmative definition may have the effect of narrowing the geographical areas in which the PHA will be able to operate. It is particularly relevant to questions about where a participant will be allowed to use his or her assistance and who qualifies as a resident of the PHA's jurisdiction for purposes of residency preference and the portability waiting period. The wider the area of jurisdiction, the more people qualify as residents and the less need to use portability.

g. Security Deposits (24 C.F.R. § 982.313, 60 Fed. Reg. 34,706; Introductory Comments at 60 Fed. Reg. 34,675-76)

HUD has abandoned its previous system for handling security deposits. Under that system, the certificate holder's security deposit was limited to the higher of one month's tenant contribution or $50. If the tenant left owing rent or damages, the landlord could claim those damages from the PHA, up to two months' contract rent, less the security deposit that was or could have been collected from the tenant. For vouchers, the PHA could allow the landlord to collect a higher security deposit and the amount the landlord could collect from the PHA was capped at one month's contract rent instead of two.²⁰

That system was designed to eliminate unaffordable security deposits as barriers that would keep poor people from finding decent housing. It reduced the amount tenants would have to pay up front to a manageable portion of their incomes, while still providing the landlords the security that they would get from an ordinary security deposit.

HUD's new regulations eliminate the backbone of the former system, the right of the landlord to claim damages from the PHA if the tenant leaves owing rent or has damaged the unit. In its place, the regulations now allow the owner to collect any amount from the applicant as a security deposit. The only possible limit, beyond state or local law, is that the regulations allow, but do not require, the PHA to prohibit deposits that exceed private market practices or the amounts charged unassisted tenants.²¹

In its Introductory Comments, HUD acknowledges the criticism that this change could make it impossible for many families with the lowest incomes to use the program, but provides no response, tacitly acknowledging that there is none.²² While it is true that eliminating the damage claim procedure will eliminate many disputes that it caused, raising the security deposits also seems to be one more step toward HUD's apparent goal of excluding the poorest of the poor from its housing assistance programs.

h. Starting Date of Assistance — Timing of the Lease, PHA Approval and the HAP Contract (24 C.F.R. § 982.305, 60 Fed. Reg. 34,703; Introductory Comments at 60 Fed. Reg. 34,670)

The beginning date of the lease term is the starting point of the three-party PHA/landlord/tenant relationship. The Section 8 lease term cannot begin until the lease is executed, the PHA has inspected the unit and has approved the lease and rent. The assistance payments begin with commencement of the lease term. The HAP contract does not have to be approved before execution of the lease; execution may be delayed up to 60 days after the beginning of the lease term. If the contract is executed after the lease term begins, the payments may be made retroactive to the beginning of the term, as long as the contract is executed before expiration of the 60 days.

If the tenant moves into the unit before the PHA's inspection is completed and approval is granted, it appears that assistance payments may not be paid for that period, even retroactively.

4. Issues That Arise During the Tenancy

a. Adding Family Members (24 C.F.R. §§ 982.151(b)(8) and 982.551(h)(2), 60 Fed. Reg 34,700 and 34,714; Introductory Comments at 60 Fed. Reg. 34,685-86)

The family must get PHA permission to add new members, unless the new member is added as a result of birth, adoption or an award of custody. Thus, if a child moves back home after having been emancipated, or even after having lived with another relative, or someone in the family gets married, the family will have to secure the PHA's blessing.²³ Failure to secure the permission is a breach of the family's obligations which, in turn, is grounds for the PHA to terminate the subsidy.

The introductory comments rejected the suggestion that HUD should require the PHA to adopt reasonable policies in determining whether to approve a new family member.²⁴ In doing so, HUD noted that the PHA has the responsibility to determine whether the household, with the new members, constitutes a family as defined by the PHA.²⁵ Thus there is some possibility that the PHA's definition of family in its administrative plan would be the standard the PHA would have to follow when deciding whether to grant approval.

When the family size has increased to a level of overcrowding, either through birth, adoption or custody award, or by the addition of a family member with PHA approval, the PHA must provide a new certificate or voucher to the family, must help them find a new unit, and must terminate their assistance in the old unit if a suitable replacement is available.²⁶

b. Break-up of the Family (24 C.F.R. § 982.315, 60 Fed. Reg. 34,706; Introductory Comments at 60 Fed.
Reg. 34,678)

Difficulties sometimes arise when a family breaks up, with a divorce, a separation or for other reasons, and more than one part of the family wants to continue to use the subsidy. In the past, HUD has had no regulations to resolve those disputes. Under the new regulations, if a family breaks up, the PHA has discretion to decide who gets the subsidy, unless a court has determined who gets it as part of a property disposition. Factors for the PHA to consider include the interests of family members who are minor children, elderly, ill or disabled, and actual or threatened physical violence.²⁷ The PHA does have to adopt a procedure and state it in its administrative plan. Beyond the procedure, however, the actual decisions may be left to a case-by-case determination.²⁸

c. Housing Quality Standards (24 C.F.R. §§ 982.401 - 982.406, 60 Fed. Reg. 34,708-12; Introductory Comments at 60 Fed. Reg. 34,681-83)

If the landlord fails to maintain the unit in accordance with the Housing Quality Standards (24 C.F.R. § 982.401, 60 Fed. Reg. 34,708) and the lease, the PHA may terminate the contract.²⁹ This termination, as a practical matter, has jeopardized tenants' subsidies, because landlords then seek to evict for nonpayment of the market rent or termination of the lease and the tenants are unable to find replacement housing where they can use their subsidies.

The new regulations address part of this problem by expressly stating, for the first time, that if a PHA withholds the subsidies from a landlord, the tenant is not obliged to pay the part of the rent that would have been covered by the withheld payments.³⁰ However, the regulatory protection is limited to the term of the lease and the HAP contract. If the PHA proceeds beyond abating the payments to terminating the HAP contract, that terminates the lease (24 C.F.R. § 982.309(b)(3)(iv), 60 Fed. Reg. 34,704) and leaves the tenant without regulatory protection.

The new regulations also impose a new duty on the tenant not to cause certain HQS violations.³¹ If the tenant causes those violations, the PHA may terminate the subsidy as a result.³² Before such a termination is finalized, the PHA must grant the tenant a normal subsidy termination hearing.³³

The HQS violations that a tenant may be held responsible for are a utility shut-off that is caused by the tenant's failure to pay for tenant-paid utilities, an absence of any appliances that a tenant is required to provide, and HQS violations resulting from damages to the unit, beyond ordinary wear and tear, caused by any member of the household or guest.³⁴ Other tenant-caused HQS violations, for example, roaches caused by poor housekeeping, are not grounds for terminating the subsidy.³⁵

5. Termination of the Tenancy and Eviction

a. Good Cause and the Endless Lease (24 C.F.R. §§ 982.309 and 982.310, 60 Fed. Reg. 34,704; Introductory Comments at 60 Fed. Reg. 34,672-74)

The regulations do not repeal the requirement that landlords must have good cause to evict, nor do they eliminate the provision that landlords may not evict in the first year of the lease except for tenant malfeasance or nonfeasance.³⁶ They do, however, change the requirement that all leases be for an indefinite term, which became known as the "endless lease" requirement. That provision was created to eliminate the need for the landlord and tenant to execute a new lease at the end of each term. It has been replaced by another provision creating two options for landlords. A landlord must use a lease that has a fixed term of at least one year but requires an automatic renewal for either successive fixed terms, month-to-month or year-to-year, or for an indefinite term.³⁷ Thus, there should be no situation in which a landlord claims a right not to renew a lease, absent a showing of good cause.

b. Business Reasons and the 90-Day-Notice Provision (24 C.F.R. §§ 982.310(d) and (e) and 982.455(b),
60 Fed. Reg. 34,705 and 34,713; Introductory Comments at 60 Fed. Reg. 34,674 and 34,683-84)

Landlords may evict for good-faith business reasons after the first year of the lease, but if they do so they must give 90 days' notice to the tenant, the PHA and HUD, specifying the reasons.³⁸ HUD must review the termination and decide whether it is lawful and whether any action can be taken to avoid it. If the PHA has not adjusted the contract rent properly, HUD must require the PHA to do so. The landlord must also be offered a new HAP contract at the maximum contract rent allowed within the FMR exception rents, as long as that rent is not unreasonably high for the unit. However, if the HUD office fails to complete this process before the 90 days expire, HUD's failure does not keep the landlord from proceeding with the eviction.³⁹

c. Notice of Grounds (24 C.F.R. §§ 982.310(e), 60 Fed. Reg. 34,705; Introductory Comments at 60 Fed.
Reg. 34,674)

The landlord's eviction notice must state grounds for terminating the tenancy. That regulatory change implements a statutory amendment added in 1990.⁴⁰ Unlike other HUD regulations, these new regulations do not require the notice to state the grounds with sufficient specificity to enable the tenant to prepare a defense.

d. Length of Notice

Except in cases where 90 days' notice is required because the eviction is for business reasons, the regulations leave it up to state law to prescribe the length of the notice period. All that HUD requires is that the notice specifying the grounds be given at least by the time the landlord commences the eviction action. Specification of the grounds in the judicial complaint is satisfactory for HUD.⁴¹ The federal notice can run concurrently with any state required notice.⁴²

e. Tenant Notice to the PHA

The regulations continue the requirement that the landlord must give a copy of the notice to the PHA.⁴³ Now, however, the tenant must also notify the PHA when he or she receives an eviction notice.⁴⁴ If the tenant does not, that is grounds for the PHA to terminate the subsidy. If the tenant does give the PHA notice, and the grounds for eviction are serious or repeated lease violations, they are also grounds for the PHA's subsidy termination.

f. Continuing PHA Payments During Eviction (24 C.F.R. § 982.311(b), 60 Fed. Reg. 34,705; Introductory Comments at 60 Fed. Reg. 34,677)

There had been some confusion under the prior regulations whether the PHA had to keep making payments on behalf of a tenant while a landlord was pursuing an eviction process. The new regulations specifically state that the PHA must continue to make the payments, even after a landlord has terminated the lease, as long as the tenant continues to reside in the unit, up until the landlord has obtained a court judgment allowing the landlord to evict the tenant. The regulations also state that the PHA may continue the payments until the family moves from the unit.⁴⁵

This new language may create some more confusion. The prior regulations had been interpreted to require continuation of the payments until the judgment was final and the tenant had exhausted all appeal rights and had been moved out. This language does not state that principle as clearly as it might.

g. Vacancy Payments and Landlord Damage Claims (24 C.F.R. § 982.311, 60 Fed. Reg. 34,705; Introductory Comments at 60 Fed. Reg. 34,675-77)

As was noted above, the new regulations eliminate the old system under which the landlord could make claims against the PHA for back rent and other amounts owed by the tenant after the tenant vacated.⁴⁶ They similarly eliminate the system under which certificate landlords could claim vacancy payments from the PHA for up to two months after the tenant moved. Now, all the landlord will get is the right to keep the HAP payment for the last month the tenant occupied the unit, even the part that covers days after the tenant had moved out.⁴⁷

6. Subsidy Terminations

a. Expanded Grounds (24 C.F.R. §§ 982.551 - 982,553, 60 Fed. Reg. 34,714-15; Introductory Comments at 60 Fed. Reg. 34,684-92)

As was noted above, the regulations specify the grounds for denying or terminating assistance (24 C.F.R. §§ 982.552 and 982.553, 60 Fed. Reg. 34,714-15) and the family's obligations (24 C.F.R. § 982.551, 60 Fed. Reg. 34,714), breach of which is one ground for terminating assistance. See discussion at Part 1, supra. These new regulations expand the grounds for termination in several respects.

Two of the new grounds are (1) a tenant's having been previously evicted from public housing and (2) having been previously terminated from the certificate or voucher program.⁴⁸ Those grounds make more sense in the context of a denial of assistance than as grounds for terminating assistance. If a PHA knows of the past eviction or termination but lets the person into the program, it makes no sense to let the PHA subsequently terminate the person's subsidy on those grounds; but the regulations do not explicitly prohibit such a termination.

Another new ground is a tenant's having engaged in violent or abusive behavior toward PHA personnel.⁴⁹ That ground makes sense for both applicants and participants, but the undefined term "abusive behavior" will no doubt lead to many cases of arbitrary terminations. Violence is one thing, but abusive behavior is pretty wide open.

Even though these new regulations eliminate a landlord's right to make damage claims against a PHA, they retain the tenant's failure to reimburse the PHA as grounds for terminating the subsidy.⁵⁰ That is to retain the PHA's leverage to secure tenant reimbursement for claims paid under the old regulations. However, under the pre-1995 regulations, the PHA generally could not terminate ongoing assistance for a tenant's failure to reimburse the PHA. It had to wait until the tenant wanted to move again.⁵¹ The new regulations change that, making failure to reimburse the PHA grounds for terminating as well as denying assistance.⁵²

Several other new grounds for termination are discussed above. They include causing one of the three Housing Quality Standard violations the tenant is obliged not to cause; not giving the PHA a copy of any eviction notice; and not securing PHA approval of some types of additions to the family. In addition, the subsidy may now be terminated for a tenant's not notifying the PHA of the birth, adoption or custody award of a child and for not notifying the PHA if any family member moves out.

b. Distinction Abandoned Between Grounds for Denial and for Termination (24 C.F.R. § 982.552, 60 Fed. Reg. 34,714-15; Introductory Comments at 60 Fed. Reg. 34,687)

Under the old regulations the grounds for termination were narrower than those for denial of a certificate to a new applicant or to a participant who wished to move. The rationale for the previous distinction was that interrupting an ongoing subsidy required greater cause than merely denying assistance to someone who was not already receiving it. With the new regulations, HUD has abandoned that view and made any ground for denial of assistance a ground for termination as well.

c. Lease Violations (24 C.F.R. §§ 982.551(e) and 982.552(b)(1), 60 Fed. Reg. 34,714-15; Introductory Comments at 60 Fed. Reg. 34,684-85)

Under the pre-1995 regulations, a family's breach of its lease or its eviction was not a grounds for subsidy termination.⁵³ Under the new regulations, however, that has been changed. The regulations specify that one of the family's obligations is not to commit a serious or repeated breach of the lease.⁵⁴ Because breaches of family obligations are grounds for subsidy termination, serious or repeated violations of the lease are now grounds for termination of the subsidy.

HUD's rationale for this change is that more landlords will be willing to participate in the program if they know that the PHA has been able to kick bad actors out of the program. HUD rejected the arguments that the landlords, not the PHAs, should decide to whom they will rent and that the PHAs are not equipped to determine whether a particular tenant has been or will be a bad tenant.

d. Absence from the Unit (24 C.F.R. § 982.312, 60 Fed. Reg. 34,705; Introductory Comments at 60 Fed. Reg. 34,677-78)

Another new ground for termination of the subsidy is that the tenant is absent from the unit. The HUD rules mandate that the subsidy must be terminated if the tenant is absent for more than 180 consecutive days.⁵⁵ At the other extreme, the PHA may not terminate the subsidy if the tenant is absent from the unit only for brief periods.⁵⁶ "Brief" is not defined. Between that range, the PHA has discretion to determine how long a tenant may be absent and for what reasons before the subsidy may be terminated. That policy must be embodied in the PHA's administrative plan. Whatever the policy, the family is obliged to notify the PHA promptly if it is absent, and to cooperate with the PHA in providing information about the length of and reasons for its absence.

Absence is defined as occurring when no member of the family is residing in the unit.⁵⁷ That then raises the question what residing in the unit means. Residing is not defined. Does someone reside in a unit even though they have not moved out but are away for a vacation, or temporarily working in another city, or are hospitalized or away doing migrant farm work?

7. Other Changes

a. Administrative and Equal Opportunity Plans (24 C.F.R. § 982.51 - 982.54, 60 Fed. Reg. 34,698-99; Introductory Comments at 60 Fed. Reg. 34,660-62)

PHAs have been required to develop two operating plans, one called an administrative plan and the other an equal opportunity plan. Both had to include certain elements required by HUD. Both had to be submitted to HUD for approval. These new regulations will allow PHAs to combine the administrative and equal opportunity plans into one document. The PHA will no longer be required to secure HUD's approval of the plan, although it will have to submit a copy to HUD. If HUD later determines that a particular policy violates HUD rules, HUD will still have the authority to order the PHA to change its policy.

There are some exceptions to this policy of eliminating prior HUD approval. Residency requirements will still have to be approved.⁵⁸ So must Family Self-Sufficiency program plans.⁵⁹

The mandatory contents of the plan will be only the 16 items that HUD specifies must be in it.⁶⁰ The PHA will be bound to follow rules established by federal law, statutory or regulatory, but the administrative plan need not set out those rules. The PHA will have discretion to set policies in many other areas, but those policies will not have to be included in the plan, nor will they have to be submitted to HUD even for its information. That outcome, which reflects a change from the proposed rule, is a result of the current deregulation and performance-based administration attitudes — i.e., attitudes that federal agencies should be concerned only about results, not about rules or processes.

b. Administrative Fees (24 C.F.R. § 982.152, 60 Fed. Reg. 34,700; Introductory Comments at 60 Fed. Reg. 34,663-67)

HUD chose not to include in the regulations the rules for calculating administrative fees. Instead, it took the position that fee calculation rules are set by the statute and the appropriations acts. Section 8(q) of the United States Housing Act of 1937 Act, 42 U.S.C. § 1437f(q), does require HUD to set fees for the program and states that they shall be set at 8.2 percent of the FMR for two-bedroom units. But, in HUD's view, that section applies only to incremental units funded since 1989, when that provision was enacted; units funded under older contracts or renewals of those older contracts are not covered by Section 8(q). The regulations acknowledge HUD's authority to specify how the ongoing fee for units under contract will be calculated, but they do not specify the method or standards for setting those fees.

HUD retains the authority to prescribe a higher administrative fee in two situations: for smaller PHAs and for PHAs operating in geographically larger areas. HUD does not oblige itself to pay such higher fees, nor even keep open the option of paying higher ongoing fees for other reasons.

Preliminary fees, for units added to the program, will be allowed. PHAs will get paid only for actual costs, but they will not have to submit up-front documentation of costs to secure payment.

Special fees will also be allowed for ongoing costs of the Family Self-Sufficiency program. HUD retains the authority to pay special fees for families who experience difficulty in renting appropriate housing. The regulation does not oblige HUD to make such payments, nor does it define the circumstances under which they may be paid. HUD also retains the authority to pay special fees for audit costs. The new rules eliminate any special fees for portability costs. There will be no such fees in FY 1996.

Each PHA must deposit into a reserve account any administrative fees it receives but does not need. Funds in that account must be used to cover costs of administering the certificate and voucher programs in the future, if the fees at that time are inadequate. If there are enough funds in the reserve to cover all administrative costs through the end of the PHA's already funded program, the PHA may use the surplus for other housing-related purposes.

c. Allocation System (24 C.F.R. § 982.101, 60 Fed. Reg. 34,699; Introductory Comments at 60 Fed. Reg. 34,662-63)

HUD rejected the public comment that it is required to adopt allocation rules and selection criteria by public rulemaking instead of by mere publication in a NOFA, or that it should do so merely as a matter of good policy. HUD also did not explain its reasons for rejecting a suggestion that its allocation policies and selection criteria should further fair housing.

8. Transition

The rules say surprisingly little about any transition period during merger of the certificate and voucher programs. The effective date is to be supplied by HUD;⁶¹ otherwise the regulations are silent. In the Introductory Comments regarding tenancies, HUD takes the position that nothing in the new rules overrides outstanding HAP contracts or leases, and that owners and tenants cannot be forced to enter into new leases or contracts.⁶² That seems to leave open the possibility that PHAs may have to operate under two sets of rules until all of their HAP contracts and leases are terminated. Because the leases are for indefinite terms and the HAP contracts last as long as the leases, PHAs may have to operate dual systems for a long time to come.

On the other hand, many of the changes do not relate to existing leases and HAP contracts. For example, the new grounds for rejecting applicants, the new rules on tolling and the new portability rules are unrelated to leases and contracts now in effect. Examples of the provisions that may be affected if existing leases and contracts are immune from change, are the tenants' obligations to get permission to add family members; the landlord's and possibly the tenant's right not to have subsidies terminated mid-stream for grounds other than those specified in the old regulations; and the landlord's right to receive vacancy payments and damage claims.

These new regulations may simplify program administration. They also may leave applicants and future participants exposed to arbitrary landlord and PHA practices because HUD chooses not to regulate either on most issues. In many cases, the absence of federal guidance may leave PHAs at a loss about what their policies should be, causing administrative inefficiency or, at a minimum, open up thousands of local policy-making processes that will consume even more precious time and resources.

1. Primarily 24 C.F.R. Part 982, added at 60 Fed. Reg. 34,695-34,717, with Introductory Comments beginning at 60 Fed. Reg. 34,660 (July 3, 1995). A new 24 C.F.R. Part 983, governing project-based certificates, is also added at 60 Fed. Reg. 34,717-28, with Introductory Comments beginning at 60 Fed. Reg. 34,692 (July 3, 1995).
2. 58 Fed. Reg. 11,292 (Feb. 24, 1993).
3. 24 C.F.R. Part 982, Subparts A and E (1995), added at 59 Fed. Reg. 36,662 (July 18, 1994).
4. 24 C.F.R. § 982.201-.213, 59 Fed. Reg. 36,662 (July 18, 1994).
5. 24 C.F.R. § 982.202(b)(1) (1995), as amended, 59 Fed. Reg. 36,684 (July 18, 1994); see also 49 Fed. Reg. 12,215 (Mar. 29, 1984).
6. 24 C.F.R. §§ 982.552(b)(1) and (2) and 982.551(e), 60 Fed. Reg. 34,714-15.
7. 24 C.F.R. § 982.301(b), 60 Fed. Reg. 34,702.
8. 24 C.F.R. § 982.303(c), 60 Fed. Reg. 34,703.
9. 24 C.F.R. § 982.307(b)(2), Introductory Comments at 60 Fed. Reg. 34,668-69.
10. 24 C.F.R. § 982.307(b)(3), 60 Fed. Reg. 34,703.
11. 24 C.F.R. §§ 982.153(b)(1)-(6), 60 Fed. Reg. 34,700.
12. 24 C.F.R. § 982.304, 60 Fed. Reg. 34,703.
13. 24 C.F.R. § 982.457, 60 Fed. Reg. 34,714 (July 3, 1995).
14. 12 U.S.C.A. § 1701z-12 and 42 U.S.C.A. § 1437f note (West 1994), codifying Section 183(c) of Pub. L. No. 100-242 (Feb. 5, 1988).
15. Compare 24 C.F.R. § 245.205(c) (1995).
16. Pub. L. No. 102-550, § 147, 106 Stat. 3672 (Oct. 28, 1992).
17. 24 C.F.R. §§ 982.353(b), 60 Fed. Reg. 34,707.
18. 24 C.F.R. § 982.353(c).
19. 24 C.F.R. § 982.4, 60 Fed. Reg. 34,696; Introductory Comments at 60 Fed. Reg. 34,660.
20. 24 C.F.R. §§ 882.112, 887.211 and 887.215 (1995).
21. 24 C.F.R. § 982.313, 60 Fed. Reg. 34,706.
22. 60 Fed. Reg. 34,676.
23. 24 C.F.R. § 982.551(h)(2), 60 Fed. Reg. 34,714.
24. 60 Fed. Reg. 34,686.
25. Id.
26. 24 C.F.R. § 982.403, 60 Fed. Reg. 34,712.
27. 24 C.F.R. § 982.315, 60 Fed. Reg. 34,706.
28. 60 Fed. Reg. 34,678.
29. 24 C.F.R. § 982.404, 60 Fed. Reg. 34,712.
30. 24 C.F.R. §§ 982.310(b) and 982.451(c)(4)(iii), 60 Fed. Reg. 34,706 and 34,713; Introductory Comments at 60 Fed. Reg. 34,683.
31. 24 C.F.R. §§ 982.404(b) and 982.551(c), 60 Fed. Reg. 34,712 and 34,714; Introductory Comments at 60 Fed. Reg. 34,685.
32. 24 C.F.R. §§ 982.404(b)(3) and 982.552(b)(1), 60 Fed. Reg. 34,712 and 34,715.
33. 24 C.F.R. § 982.555(b)(6), 60 Fed. Reg. 34,716.
34. 24 C.F.R. §§ 982.404(b), 60 Fed. Reg. 34,712.
35. 60 Fed. Reg. 34,685.
36. 24 C.F.R. §§ 982.310(a) and (d)(2), 60 Fed. Reg. 34,704-05; see also previous comments at 51 Fed. Reg. 16,296 (May 2, 1986).
37. 24 C.F.R. § 982.309(b)(2).
38. 24 C.F.R. §§ 982.310(e)(3) and 982.455(b), 60 Fed. Reg. 34,705 and 34,713.
39. 24 C.F.R. § 982.455(b), 60 Fed. Reg. 34,713.
40. 42 U.S.C.A. § 1437f(d)(1)(B)(iv) (West 1994).
41. 24 C.F.R. § 982.310(e)(1)(i), 60 Fed. Reg. 34,704, Introductory Comments, 60 Fed. Reg. 34,674.
42. 24 C.F.R. § 982.310(e)(2), 60 Fed. Reg. 34,705.
43. 24 C.F.R. § 982.310(e)(2)(ii), 60 Fed. Reg. 34,705.
44. 24 C.F.R. § 982.551(g), 60 Fed. Reg. 34,714.
45. 24 C.F.R. § 982.311(b), 60 Fed. Reg. 34,705.
46. 60 Fed. Reg. 34,676.
47. 24 C.F.R. § 982.311, 60 Fed. Reg. 34,705.
48. 24 C.F.R. §§ 982.552(b)(2) and (3), 60 Fed. Reg. 34,715.
49. 24 C.F.R. § 982.552(b)(10), 60 Fed. Reg. 34,715.
50. 24 C.F.R. § 982.552(b)(7), 60 Fed. Reg. 34,715.
51. Former 24 C.F.R. §§ 882.210 and 887.403.
52. 24 C.F.R. § 982.552(b)(7), 60 Fed. Reg. 34,715.
53. 49 Fed. Reg. 12,215, 12,217 (Mar. 29, 1984).
54. 24 C.F.R. § 982.551(e), 60 Fed. Reg. 34,714.
55. 24 C.F.R. § 982.312(a), 60 Fed. Reg. 34,705.
56. Id.
57. 24 C.F.R. § 982.312(c), 60 Fed. Reg. 34,705.
58. 24 C.F.R. § 982.208(b).
59. 42 U.S.C.A. § 1437(g)(1) (West 1994).
60. 24 C.F.R. § 982.54(d), 60 Fed. Reg. 34,699.
61. 60 Fed. Reg. 34,660.
62. 60 Fed. Reg. 34,676.