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Enhanced VouchersDescription: When an owner leaves a HUD program, usually by prepayment of a subsidized mortgage or opt-out of a project-based Section 8 contract, the owner’s obligation to maintain the low rents or accept the project-based assistance at the property is lifted, leaving many of the tenants living in the building unable to pay the new rent without a subsidy. Congress has authorized and funded enhanced vouchers to subsidize rents for tenants upon occurrence of an "eligibility event." The authority to provide vouchers in the case of prepayment was first authorized in 1996, and Congress extended enhanced voucher assistance to tenants in opt-out properties in 1999. Enhanced vouchers have two key features to supplement the regular housing choice voucher program. First, enhanced vouchers may exceed the public housing authority’s payment standard, allowing payment of any rent which is determined "reasonable" by the housing authority. Second, they give the tenants a right to remain in their unit after conversion to market rents, thus creating an obligation for the owner to accept the voucher. So long as the rent remains "reasonable," the tenant’s portion of the rent should not increase. If the tenant elects to move, the voucher loses its enhancements and becomes a regular housing choice voucher. The enhanced voucher statute requires HUD to make these vouchers available to eligible tenants residing in the property at the time of prepayment or opt-out, as well as other "eligibility events," primarily "preservation" transactions such as a conversion to vouchers in Mark-to-Market restructuring. Tenants often encounter problems with the issuance and use of enhanced vouchers, including:
Statutes Section 8(t) of the United States Housing Act, codified at 42 U.S.C. §1437f(t), enacted by Pub. L. No. 106-74, §538, 113 Stat.1122 (Oct. 20, 1999), as amended below;
Pub. L. No. 106-74, §531, 113 Stat. 1113 (Oct. 20, 1999) (amending MAHRAA §524(d), requiring enhanced vouchers for all Section 8 contracts that are not renewed). Pub. L. 107-116 §613, 115 Stat. 2224 (Jan. 10, 2002) (adding Sec. 525 of MAHRAA, which provides for consistency in rent levels between the "market rent" determinations in project-based Section 8 contract renewals and amounts allowed as reasonable for enhanced vouchers). 12 U.S.C. § 4119 (definition of "eligible low-income housing," prepayment of which triggers eligibility for enhanced vouchers contained in 42 U.S.C. § 1437f(t)(3)(B), through Pub. L. No. 104-204). Older statutes re enhanced vouchers: Pub. L. No. 105-276, 112 Stat. 2461, 2469 (Oct. 21, 1998) (Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999). Pub. L. No. 105-65, 111 Stat. 1343, 1351 (Oct. 27, 1997) (Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1998). Pub. L. No. 104-204, 110 Stat. 2874 (Sept. 26, 1996) (Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997). Pub. L. No. 104-134, § 101(e), Title II, paragraph entitled "Annual Contributions for Assisted Housing," 110 Stat. 1321-268 (Apr. 26, 1996). Pub. L. No. 104-120, § 2(b), 110 Stat. 834 (1996) (Directs HUD to use certain appropriations in accordance with an earlier bill which included enhanced vouchers for prepayments).
Regulations: None issued as of July, 2002. HUD Handbooks HUD, Section 8 Renewal Policy Guide (initially issued Jan. 19, 2001). The document posted here is a version of the Guide as amended through November 2001. Check HUD's web site for any revisions. Chapter 11, Section 3 describes tenants’ right to remain with enhanced vouchers. Appendices 11-1 and 11-2 prescribe the required form of opt-out notice, which includes a certification that the owner will accept enhanced vouchers. See also Section 1-6, ¶ I (right to remain absent good cause to evict), Section 8-1 (requires owners to certify they will honor tenants’ right to remain after opt-out, and directs issuance of short term project-based contract extension where enhanced vouchers are delayed). Notices and Other Administrative Issuances:
[HUD Notices may be accessed through <www.hudclips.org/sub_nonhud/cgi/hudclips.cgi >] Articles "HUD’s Fair Housing Duties and the Loss of Public and Assisted Housing", 29 HOUS. L. BULL. 1 (Jan. 1999). "HUD Issues Guidance for FY 2000 Enhanced Vouchers," 30 HOUS. L. BULL. 64 (May 2000). "Second HUD Report on "Vouchered-Out" Assisted Properties," 31 HOUS. L. BULL. 68 (March 2001). "HUD Revises Enhanced Voucher Guidance," 32 HOUS. L. BULL. 8 (Jan. 2002). Cases 215 Alliance v. Cuomo 61 F.Supp. 2d 879, No. 98-64 DWF/AJB (D. Minn. Aug. 30, 1999).Successful challenge to HUD's approval of opt-out using HUD form notice due to lack of clarity regarding owners intent and failure to state reasons (the latter required by the version of 42 USC §1437f(c)(9) then in effect, since repealed); HUD's enhanced voucher policy of not subsidizing subsequent rent increases contrary to authorizing law; favorable dicta on Fair Housing claims 42 U.S.C. §§ 3604 and 3608, failure to consider the effects on racial minorities, disabled individuals, and failure to affirmatively further fair housing. Baker v. Property Investors of Connecticut Ci.v No. 302CV1839 AHN (D. Conn.. TRO Oct. 21, 2002) (New Era Court) Tenants filed suit in federal court to prevent evictions and termination of voucher assistance, following rent and security deposit disputes associated with issuance of enhanced vouchers. The vouchers were issued just two weeks before the termination of the project-based contract, resulting in a chaotic transition which included a gap in assistance where neither the project-based assistance nor vouchers were effective, allegedly improper rent determinations, and an inability of tenants to pay the increased security deposit. The resulting disputes have also cause the public housing authority to threaten to terminate tenants’ voucher assistance. Tenants obtained restraining orders against eviction and suspension of voucher assistance, and plaintiffs remain in settlement on the remainder of the claims. Court granted HUD's motion to dismiss for lack of standing. Barrientos v. 1801-1825 Morton, LLC No. CV 06-06437 (C.D. Cal. filed Oct. 13, 2006)Tenants receiving enhanced vouchers seek to prevent property owners, under the Unified Enhanced Voucher Authority Statute and the Los Angeles Rent Stabilization Ordinance, from evicting them for a business or economic reason. File includes:
Browning v. Martinez No: C-1-01-152 (S. D. Ohio 2001) (Audobon Park) Challenge to HUD's failure to issue vouchers for each unit of a Sec. 236 project where owners prepaid the mortgage. Claims include: HUD's failure to enforce regulatory agreement, issue enhanced vouchers, and notify residents of voucher rights, brought through the APA; a due process claim against HUD and private owners; and violation of the regulatory agreement, state contract law claim, and breach of transfer agreement brought against private owner defendants. Cathey v. Woodford Apts. No.C-1-01-426 (S.D. Ohio W. Div. July 31, 2001) Challenge to owner's refusal to accept enhanced vouchers and allow tenants to remain after prepayment of Section 236 financing. Case was settled by an agreed order providing that plaintiffs could remain in place with the vouchers, and are subject to future termination only for good cause. Estevez v. Cosmopolitan Assocs., LLC No. 1:05-CV-4318 (JG) (E.D.N.Y. Nov. 28, 2005). Challenge to owner's refusal to accept enhanced vouchers after Section 8 opt-out, based on enhanced voucher statute, 42 U.S.C. sec. 1437f(t). After briefing and hearing, court finds that statute requires owner to accept enhanced vouchers of prior tenants, that this statutory right is enforceable through an implied private right of action, and issues preliminary injunction. Feemster v. BSA Limited Partnership 471 F. Supp. 2d. 87 (D.D.C. 2007) Challnge to owner's refusal to accept tenants' enahnced vouchers after Section 8 opt-out. File includes:
(Country Village) Challenge to owner's refusal to accept enhanced vouchers after opt-out. Owner agreed by settlement and stipulated order to accept the voucher. Hill v. Delrob, Inc. Case No. 02CVH-02678 (Ohio Muni Ct, 2002) Tenant brought suit in state court against property owner for failure to accept enhanced vouchers. Court issued a TRO that requires the owner to: make repairs in order to pass PHA housing quality standard inspection, process required documents to utilize the enhanced voucher, and permit plaintiff to use voucher for her rental unit. Claims settled in a consent order entered at preliminary injunction hearing, tenant allowed to remain in the same unit using the enhanced voucher. James v. Cincinnati Metropolitan Housing Authority Case No. A0202269 (Hamilton Cnty. Ct., filed March 13, 2002)Tenants filed suit in state court to challenge housing authority’s refusal to issue enhanced vouchers after opt-out. Two tenants were "screened" for having a past debt to the housing authority, and faced eviction for non-payment of rent after landlord raises rents. Complaint alleges violations of 42 USC § 1437f(t), due process, HUD rules, and a breach of contract. (HUD was not named in the action.) The housing authority could produce no evidence of debt for one tenant at the TRO hearing and granted a voucher, and for the other tenant it effectively mooted the due process claim by issuing a new voucher, then giving notice and an administrative hearing to terminate that voucher for the debt. The court denied both the TRO and a preliminary injunction, and was not persuaded by the 1437f(t) claim. Jeanty v. Shore Terrace Realty Ass'n No. 03 Civ. 8669 (BSJ) (S.D.N.Y. decision Aug. 9, 2004).Challenge to owner's refusal to accept enhanced vouchers following opt-out from project-based Section 8 contract. Court issued preliminary and permanent injunctions requiring owner to accept tenants' enhanced vouchers, finding the federal law providing tenants with an "election to remain" was clear. Owner declined to appeal. People to End Homelessness v. Martinez (D. R.I., March 29, 2001) (Order on Motion to Dismiss), aff'd 339 F.3d 1 (1st Cir. 2003)(Develco) Plaintiffs challenge HUD's approval of Section 8 opt out and provision of enhanced vouchers under Administrative Procedures Act based on notices that do not comply with state and federal statutes, and failure to affirmatively further fair housing under 42 U.S.C. § 3608(e). The District Court dismissed all claims against HUD, and partially dismissed claims against the Owner. On plaintiffs appeal to the First Circuit, court upheld lower court's judgment, finding that HUD acted consistently with governing statutes in issuing enhanced vouchers despite deficient opt-out notices. Taylor v. Hous. Auth. of Atlanta No. 2005CV105622 (Ga. Super. Ct., filed 2005), on removal, No. 1:05-CV-2335 JTC (N.D. Ga. 2005) Challenge to PHA's denial of voucher assistance to certain tenants of property where project-based Section 8 contract was terminated by HUD for owner breach. PHA had denied tenants for various reasons, primarily alleged prior criminal activity during past decade, despite tenancies in good standing. Upon demand, PHA provided vouchers for most tenants initially denied, except two plaintiffs. Claims based on federal statutes including the enhanced voucher statute, 42 U.S.C. Sec. 1437f(t), and MAHRAA Sec. 524(d), as well as federal regulations. Case was filed in state court, where TRO was obtained after hearing and decision. Prior to PI hearing, PHA then removed case to federal court, which issued an opinion and oder denying PI after hearing. Taylor v. Martinez CV 02-1120-AA (D. Ore. filed 2002) (Washington Plaza) Class action suit brought on behalf of all tenants holding enhanced vouchers who paid rent increases as a result of HUD’s unlawful policy to only increase the payment standard to cover an owner’s first rent increase following prepayment of the HUD mortgage. The suit requested that HUD identify, locate and reimburse tenants for subsidy amounts unlawfully withheld. Court granted HUD's motion to dismiss plaintiffs' APA claims for reimbursement on grounds of sovereign immunity. HUD and plaintiffs then negotiated a settlement, approved on May 16, 2005, which generally requires PHAs to identify and reimburse affected tenants from funds under their ACC, their reserves, or funds created by turnover vouchers. HUD has issued Notices directing PHAs to undertake specific activities, so the implementation process should be ongoing from August of 2005 through at least the next year. For more information, see www.hud-enhanced-vouchers.org |