National Housing Law Project Section 8 Housing

To: Rod Solomon, Deborah Vincent, Gloria Cousar, Jerry Benoit, Susan Wachter, Bill Apgar

From: Barbara Sard and Jeff Lubell, CBPP
          Jim Grow, Natl. Housing Law Project

Date: January 11, 2000 

Re: Need for Guidance to PHAs on Federal Laws that Prohibit Discrimination Against Voucher Holders

As you know, in many parts of the country voucher holders are reported to be having increasing difficulty locating suitable units as rents have risen and vacancy rates have dropped. There are many strategies that PHAs could use to help remedy this problem. We know you are working on initiatives to help make PHAs more aware of possible approaches.

One of the simplest, cost-free steps that HUD could take would be to issue a list of the existing federal laws that prohibit owners of certain types of rental housing from discriminating against voucher holders (including tenants with enhanced vouchers). By making PHAs and groups that assist voucher holders to locate suitable housing aware of such rules and the projects in each state or region that are subject to them (through notice and posting on HUD’s web site), additional families will be able to obtain affordable housing with their vouchers. 

From our research, the following types of federally-subsidized units should be open to Section 8 voucher-holders, under provisions of federal law that require particular types of owners not to discriminate against certificate or voucher holders. We are providing this level of detail for your ease of review. A general guidance to PHAs and the public should be in plain English to the extent possible.

• Tax credits units: Internal Rev. Code, 26 U.S.C.A. § 42(h)(6)(B)(iv) and 26 C.F.R. § 1.42-5(c)(1)(xi) require owners of low-income housing tax credit projects to certify, at least annually, that they have in place an "extended low-income housing commitment" that prohibits, inter alia, "the refusal to lease to a holder of a [Section 8] voucher or certificate . . . because of the status of the prospective tenant as such a holder.").¹

• HOME-funded rental units: 42 U.S.C. § 12745(a)(1)(D) specifies that rental units subsidized in whole or part with HOME funds may not be "refused for leasing to a holder of a voucher or certificate of eligibility under section 1437f of this title because of the status of the prospective tenant as a holder of such voucher or certificate of eligibility." By regulation, the Department has extended this protection from discrimination to holders of HOME-funded tenant-based rental assistance certificates. 24 C.F.R. § 92.252(d).

• Mark-to Market projects: 42 U.S.C.A. § 514(e)(9), § 1437f note, and 24 C.F.R. §401.483 require that Mark-to-Market Restructuring Plans "must prohibit any refusal of the owner to lease a unit solely because of the status of the prospective tenant as a section 8 certificate or voucher holder." This obligation is relevant to those developments that have units without project-based subsidy.

• Multifamily projects purchased from HUD: 12 U.S.C.A. § 1701z-12 and 24 C.F.R. §§ 290.19 and 290.39 prohibit the unreasonable refusal "to lease a vacant dwelling unit in" a multifamily housing project purchased from HUD "to a holder of a [Section 8] certificate . . . solely because of such prospective tenant’s status as a certificate holder".

• Rental rehab and HODAG: 42 U.S.C.A. § 1437o note, §§ 1437o(c)(2)(G)(i) & (d)(4)(D)(i)), and 24 C.F.R § 511.11(d)(iii) & § 850.151(c) require that owners of rental rehabilitation projects and HODAG buildings "shall not discriminate against prospective tenants on the basis of their receipt of, or eligibility for, housing assistance under any Federal, State or local housing assistance program . . . ."

• Right of tenants of previously HUD-assisted multifamily housing with enhanced vouchers to choose to remain in current units: Effective Oct. 20, 1999, eligible tenants affected by any "conversion events" in HUD-assisted multifamily properties (e.g., prepayments, Section 8 terminations, or other "preservation" transactions) must receive enhanced vouchers. 42 U.S.C. § 1437f(t), created by Section 538 of Pub. L. 106-74, (113 Stat. 1122); 42 U.S.C. § 1437f note (MAHRAA), Section 524(d), for Section 8 non-renewals, created by Section 531 of Pub. L. 106-74. HUD has stated in Notice H 99-36, December 30, 1999 (pp. 29-30) that all enhanced voucher tenants "may elect to remain" in their units, just as prepayment enhanced voucher tenants could under the provisions of the FY 1997, 1998 and 1999 Appropriations Acts, P.L. 104-204, 105-65 and 105-276 (if owners prepay FHA-insured mortgages, tenants receive enhanced vouchers and "may elect to remain").

• Right of tenants in HUD-subsidized and HUD-assisted projects to receive tenant-based rental subsidies: 12 U.S.C.A. § 1715z-1b(b)(2) requires the Secretary of HUD to "assure that . . . project owners not interfere with the efforts of tenants to obtain rent subsidies or other public assistance." While the general wording of this provision makes it applicable to receipt of all rental subsidies, and not only Section 8 vouchers, it would also preclude HUD-subsidized and HUD-assisted owners and owners of developments in which tenants receive enhanced vouchers from interfering with tenants' efforts to secure and use tenant-based Section 8 subsidies. This right is important to tenants in projects without income-based rental assistance, as well as to those in developments where only some of the units have project-based rental assistance.² It can also add further weight to the right of tenants with enhanced vouchers to use them to rent in place, so long as the PHA approves the rent as reasonable.

Of course, knowing which types of buildings have special duties towards voucher holders only helps if PHAs and families seeking housing can easily locate where such buildings are located. We urge HUD to instruct its field offices to provide PHAs with a list of such developments in their region and instruct PHAs to make this information available to recipients of Section 8 tenant-based assistance. The field offices should be able to obtain this information either from HUD’s database or from state housing finance agencies. The information should also be made available on HUD’s web site.

We hope that HUD will take the relatively simple and cost-free step of issuing guidance to PHAs and the public about these existing federal law protections for voucher-holders, and making the information available concerning the locations of the relevant developments.
 

1.   Per 26 C.F.R. § 1.42-5(c)(1)(xi), all owners of housing tax credit projects subject to § 7108(c)(1) of the Omnibus Budget Reconciliation Act of 1989 (mistakenly termed Revenue Reconciliation Act of 1989) must certify, at least annually, that they have in place an “extended low-income housing commitment.” Section 7108(c)(1) first introduced the requirement of an “extended low-income housing commitment.”  The definition of an “extended low-income housing commitment” was amended by § 13142 of the Omnibus Budget Reconciliation Act of 1993 to include prohibition of discrimination against Section 8 certificate or voucher holders.

2.   In 1983, under the Reagan Administration, HUD issued a regulation that would make the statute inapplicable to tenants in buildings with HUD-subsidized mortgages who wish to use Section 8 certificates and vouchers.  24 C.F.R. § 245.205(c) states that the duty of owners of buildings with HUD-subsidized mortgages does not include the obligation to sign a section 8 contract on behalf of an existing tenant.  This regulation appears to be unauthorized, in violation of the statutory intent, and contrary to HUD’s current policies to promote the non-discriminatory acceptance of Section 8 subsidies, particularly by federally-subsidized landlords.  We strongly urge HUD to rescind 24 C.F.R. § 245.205(c).

In the event that you retain 24 C. F. R. § 245.205(c), it is important to recognize how this provision has been affected by Section 599 of the Quality Housing and Work Responsibility Act (QHWRA).   By its terms, 24 C. F. R. § 245.205(c) only absolves “mortgagors” from the statutory requirement not to interfere with tenants’ efforts to obtain rent subsidies.  As amended by QHWRA, 12 U.S.C. § 1715z-1b now applies to all projects that receive Section 8 project-based assistance and to projects where tenants receive enhanced vouchers.  While some of these projects have HUD-subsidized mortgages (and therefore involve “mortgagors”) others do not.  Irrespective of 24 C. F. R. § 245.205(c), the obligation not to interfere with tenants’ right to obtain Section 8 subsidies thus applies to owners with partial project-based Section 8 assistance or where tenants have enhanced vouchers.