National Housing Law Project Public Housing

Appendix 2

Legal Services Attorneys Work With Public Housing Tenants to Obtain Rent Refunds and Credits

by Richard Tenenbaum

When Marsha Rhodes began her job as a security guard, her public housing rent was increased to reflect 30% of her new income. Due to a little-known rule, buried in a mass of federal regulations, however, Marsha has received a rent credit of $3,426. Marsha is just one of the many tenants throughout New England who may be eligible for a rent refund or credit based upon a federal provision mandating that public housing residents who secure employment and increase their income by participating in an employment training program receive no rent increases based on their earnings for 18 months after they get their jobs. Many tenants who have obtained employment have also been paying increased rents, and, like Marsha, may be entitled to rebates.

Legal Eagles Find Provision

Congress repealed the Aid to Families with Dependent Children public assistance program (AFDC), and it has been replaced by state-designed temporary programs. These new state programs generally require that recipients receive appropriate training and find jobs. For public housing residents, an increase in income means a corresponding increase in rent, equaling 30% of the additional income. Congress and HUD, therefore, took some action to mitigate the impact on families in which a family members has recently gone from welfare to work.

The provision Congress enacted mandated that public housing residents who secure employment and increased income by participating in an employment training program would not have their rent increased for 18 months after they get their job. HUD delayed almost four years before issuing the regulations to implement that requirement, but finally did so on August 24, 1994. Yet it appears that for the past three years, virtually no one was aware of the rule, and public housing authorities have been improperly increasing rents of many residents who have gone to work. Judith Liben of Massachusetts Law Reform Institute, a New England Network member, first discovered the rule and publicized it; in November, advocates in Connecticut began working to get this rule implemented in their state. 

How Does the Rule Work?

In January, HUD issued an instruction notice explaining how the requirement works ( HUD Notice PIH 98-2, Treatment of Income Received From Training Programs, January 12, 1998). With that new notice, residents should benefit from the delayed rent increases that the law requires, both in the future and retroactively. To qualify for a delayed rent increase, a resident must be living in public housing and must have participated in a qualified program providing employment training and supportive services. If the resident earns any income as a result of participating in that training program, those earnings are excluded when determining the resident's rent. The period for which they are excluded includes the time when the resident is participating in the program, plus the first 18 months the resident has a job after completing the program. This means that any income from wages that would be greater than the income the resident had before entering the training program would not be counted by the housing authority in calculating the rent for the 18 months after the job began. This reduces the disincentive to work and is particularly important to families facing the loss of public assistance. 

Eligible Training Programs

What types of training will qualify a participant for the income exclusion? The HUD notice states that the training generally will take place in a series of sessions over a period of time and will be designed to enhance the individual's ability to obtain employment. It may include classroom training in a specific occupational skill; on-the-job training with wages subsidized by the program; or basic education. The regulations require the training program to be at least partially governmentally funded. The regulations also require the program to be operated or administered by a public agency. As private companies or non-profits often provide training under contract with public agencies, the notice clarifies that such programs would qualify provided the public agency establishes the goals, standards and timeframes and monitors performance.

Call to Action

In Connecticut, thousands of public assistance recipients have received training that should qualify them to avoid large public housing rent increases when obtaining jobs. A team of attorneys and resident advocates, including New England Housing Network members Richard Tenenbaum of Connecticut Legal Services and Lynne Ide of the Connecticut Housing Coalition, researched the history of the rule, advised resident networks about it, and wrote to housing authorities and the Connecticut state HUD office advocating for implementation of the regulation. 

In a further development, a newspaper reporter saw a memo sent to residents, and subsequently wrote three stories that were republished statewide and seen by U.S. Senator Christopher Dodd. Senator Dodd wrote to HUD Secretary Cuomo, which led to negotiations with HUD's Connecticut public housing staff on implementation of the exclusion law. HUD has now decided that all Connecticut public housing residents who have participated in training programs, including classes on job searching skills, General Equivalency Degree (GED), English as a second language classes, or skills training for a specific occupation, qualify for the exclusion. 

A committee made up of representatives of housing authorities, legal services and HUD have drafted notices to be sent to present and former public housing residents. If they are entitled to receive the exclusion, they will get refunds or credit against future rent. In cases in which a family left public housing after being served with an eviction suit for nonpayment of an improper rent, such families will be offered the opportunity to return. If, instead, a family settled the eviction by paying a rent arrearage and also court or attorney's fees and were able to stay, these fees must be refunded. Housing authorities were told by HUD that they will be able to obtain adequate reimbursement for refunds or rent credit given, but not for their administrative costs to implement the rule.

Positive Results

Some families have already begun to receive rent refunds or credit. Monica Lane, a client of Connecticut Legal Services in Stamford, was trained in secretarial skills and found a job as a secretary. When she began work, 30% of her gross wages went toward a rent increase. After she received notice of the correction of the overpayment, Ms. Lane wrote a thank you note to her attorney saying that she has bought a car to use to get to work and will be giving her family its first vacation ever. Marsha Rhodes of Stamford, mentioned above, received training and got a job as a security guard. Because she has been paying the higher rent for such a long period, she has been notified that she is entitled to a rent credit. 

It is too soon to tell how many people in Connecticut will be eligible for refunds or credit; no one knows how many people have received qualified training since 1994 or how much money is involved. Connecticut Legal Services estimates that the average refund or credit will be over $1000. Because of the differences in each state's public assistance program, eligibility will vary, but the rent exclusion rule will be an important benefit for public housing residents everywhere who have received training and have gone from welfare to work. Housing advocates should check with public assistance specialists in their states about qualification of training programs, and should inform public housing residents of their rights and assist them in securing implementation by housing authorities.

Richard Tenenbaum is Director of the Housing Task Force at Connecticut Legal Services (203-336-3851).