[ Reply ]
From: Barbara Sard
email: mailto:mmccreight@gbls.org
link: http://
date: 6/22/0 08:53
Date: 12/21/00
Time: 11:28:53 AM
Remote Name: 207.251.188.199
Comments on Draft REAC Income Discrepancy Resolution Guide (Version 1.0, Release 1.4, March 31, 2000)–prepared by Mac McCreight, GBLS, for LALSHAC discussion, 6/22/00
Cathy, since I won't be able to be on the conference call on 6/23 (I'll be out for the day), I thought I would get these comments together on the REAC guide and related issues. Some of them are in shorthand, and would need to be expanded (particularly the due process discussion, citation to the Watson case, argument that the statute, by requiring independent agency verification, contemplates something like APA review if there is a dispute and not otherwise a "state actor" involved in the determination, and the piece on the statutory requirement for "agreements" with tenants/participants before CMIV access).
An overall preliminary point, which I haven't put in the comments, is the complete disconnect between the REAC guide and HUD's new approach (or at least what we think is HUD's new approach), as reflected in the factsheets. My understanding, with the new approach, was that this current computer match would be to identify discrepancies and to get things "back on track", rather than to penalize famiilies and require repayment and termination. At least that's the way the fact sheets would be interpreted by the layperson. The "revised" REAC guide, on the other hand, keeps the original model of repayment and termination. Obviously our pitch should be the non-punitive one; the comments below, however, assume that REAC's going to keep the repayment and termination approach.
I will post these on the LALSHAC discussion board. I have no pride of ownership, and these can simply be incorporated into whatever may finally go out under LALSHAC or other heading, with me as one of the contributors. As I've indicated in the past, however, I have no "specific" client on this, although I'm sure that the guide will affect many clients I've worked with, and therefore feel nervous being a "signatory" to anything except as a contributor to a group LALSHAC submission.
Chapter 1, Introduction
1.3 (p. 2): Calendar Year 2000 Federal Tax Data Computer Matching Income Verification Process: Dates for mailing of discrepancy letters and notices, as well as when first POA status reports are due, should be changed.
1.3.1 (p. 4) Add new section: Should be a section which discusses compliance with statutory requirement that there be an agreement in place with the resident under which the resident agrees to provide the data. (In public housing, PHAs may have amended their leases to do this, but if not, would need to amend their leases with 30-day notice and comment period, as provided in 24 CFR 966.3 and 966.5. In HUD multifamily housing, not sure if HUD multifamily lease already has this language. In tenant-based Section 8, will need to be a separate agreement between tenant and PHA, as there is no lease between such parties, and the private owner's lease
1.3.3 (pp. 4-5): Needs of disabled, elderly, and non-English speaking tenants: I think we need to know what the recorded message says (for non-English speaking tenants). There should be language, in all of the form notices, which discusses reasonable accommodation and how the members of the household may request reasoanble accommodation (alternative communication formats, delay where household is hospitalized/bedridden, involvement of third parties who may aid in communication/understanding).
Chapter 2, Discrepancy Resolution
2.1 (p. 5): HUD Discrepancy Notifications: What if the discrepancy works the other way (i.e., tenant wasn't granted sufficient rental assistance), what happens? Where is HUD's policy/guidance on this? Should be clear reference to a policy.
2.2 (pp. 6-7): Contacting Tenants: Is there a standard letter used for cases of pursuing discrepancy resolution and possible recovery of excess rental assistance if tenant vacates?
2.2.1 (p. 7): Processing If a Tenant Fails to Respond to the POA Contact: There are no standard tenant letters in the Appendix A (for either the first, second, or third letters), and we should have an opportunity to review and comment on these letters. Assume, in the second paragraph, that the last two sentences should say "third", rather than "second", letter. The POA draft letters, which are included in Appendix F, have various defects (see comments below)–in addition, they should also include reasonable accommodation and translation language.
2.2.2 (pp. 7-8): Process If a Tenant Claims that a HUD Discrepancy Letter Was Not Received: The discussion here points to a situation which may occur, where the person who is not cooperating is not the same as the head of household and who may be non-cooperative. There may be situations, for example, where it's an abusive spouse. As with other instances of non-cooperation, head of household should have right to exclude non-cooperating household member as an alternative toward losing rental subsidy or being evicted. (Analogy to the "community services" requirement.)
2.4.5.1 (p. 12): Determining if Income is Excluded: As we've said in earlier comments, this is completely inadequate. There needs to be an Appendix or easily accessible document on the various exclusions, etc. Simply citing to current HUD regulations, or the PIH Notice from 1993, is not good enough. To take one example–the 18-month public housing earned income disregard in effect from 1994 through September, 1999 is no longer reflected in the current regulation, nor would it be reflected in the 1993 PIH Notice. In addition, there should be a false positive box for this, or something else on the standard questionnaire that directs managers to ask the right questions, and exclude cases from benig identified as a discrepancy where income would be excluded.
2.4.5.2 (pp. 12-15): Determining Tenant Reported and Unreported Earned Income: This seems to assume that unearned income would never be excluded, but that's not the case. For example, the income that appears on a tax return may, in fact, be a trust which would be excludable, or it may be some other source of sporadic income that isn't counted (small lottery winnings, etc.) Should double-check regs on this. As is indicated in HUD Handbook 4350.3, there may also be situations where a household member has an asset, but it shouldn't be countable (such as where a battered woman co-owns the marital home, but can't realize any income or assets from it because she's fled abuser), and these should be recognized.
2.5 (pp. 15-16): Calculating Excess Rental Assistance: End note here says if the difference is negative, the POA should process the underpayment of assistance "according to established program guidelines". What are they? There should be clear reference to HUD policies and guidelines on this.
Chapter 3, Administrative and Legal Actions 3.2 (p. 17): Obtaining Repayment of Excess Rental Assistance: The last sentence says, "In some instances, POAs may not be able to recover excess rental assistance and may choose to terminated assistance to a household with one or more tenants who failed to report income." As noted above, this seems contrary to the tenant letters/fact sheets as to the objective of the current computer match. Moreover, this makes it appear that POAs must first exhaust efforts to recover excess rental assistance, including offering reasonable repayment agreements (see discussion below) before using the extreme remedy of termination. We agree that should be the policy, but HUD should make this exhaustion requirement clear.
3.2.2 (p.18): Repayment Agreements: The guide refers to the POA's established repayment policy as stated in its Administrative and Operating Plan. It is our experience that many POAs do not have any repayment policy in their plans, or that the plans are very vague (simply providing that the POA "may" offer a repayment plan. We don't know what provisions may be stated in HUD contracts or regulations on this. We are concerned that POAs may use a "take it or leave it" approach, only offering repayment agreements with such short periods for repayment, or with steep down payments, as to be unrealistic for low-income families. Repayment agreements should be reasonable, and should consider the household's ability to pay. It serves no one's interest if the result of the repayment plan is that the tenant will not realistically be able to pay rent to the POA (in public housing or multi-family housing) or the private owner who is participating in the tenant-based Section 8 program. As long as the tenant is willing to repay excessive rental assistance under some kind of reasonable repayment plan, other remedies (such as termination) should not be used. In addition, if the tenant wishes to at first dispute whether there is a discrepancy at all, or the amount of the discrepancy, the tenant should not be penalized for exercising her rights through the informal hearing process, grievance procedure, or whatever due process will be applied to private POAs (such as HUD review—see below), the tenant should not be penalized for exercising this right, but should still get the opportunity to enter into a reasonable repayment plan once the grievance or informal hearing process is exhausted and it is clear what excess rental assistance needs to be repaid.
3.2.3 (p. 18): Decreasing Tenant Rental Assistance Without a Repayment Agreement: This increasing of rents to a ceiling or market level is really only an available remedy in the HUD multifamily program; there is no regulatory or other provision for it in the public housing or tenant-based Section 8 program. Moreover, it's not clear what the "due process protections" are in these programs—see discussion below—and the courts have seemed to conclude that a HUD review remedy must be available, under the APA, for action initiated by owners based on data from HUD. The guidance should make clear that if an owner initially tries to recoup assistance this way because of the tenant's failure to cooperate in offering a reasonable repayment plan, tenant should have the ability to stop the continued imposition of the ceiling or market rent by entering into repayment agreement. The analogy here would be to the multifamily recertification process, where the tenant can be raised to ceiling for failure to recertify, but can then subsequently be adjusted to an income-based figure based on compliance with recertification. It should be noted that the remedy of being raised to ceiling or market for failure to enter into a repayment agreement will need to be specified as a remedy in the lease—absent this, courts are likely to find that this action is not authorized, and that rent can only be raised to ceiling for the reasons articulated in the lease.
3.3 (p. 19): Initiating Legal Actions: It's not clear what materials will be provided related to the receipt or non-receipt of certified mail by tenant for whom legal action is being initiated. The letters themselves cannot be provided to POAs, as this would violate the statutory scheme prohibiting direct release from HUD to POAs of IRS data.
3.1 (p. 19): Terminating Rental Assistance: Statement here is that PHAs can terminate assistance through a hearing process, while OAs can only terminate tenancy (pursue eviction) through legal action. It is true that there is no hearing process for OAs that themselves are not state actors (if the OA is a State Housing Finance Agency, or is overseen by a State Housing Finance Agency, a hearing process could be established through the HFA—see due process discussion below). However, it's not true that PHAs can terminate rental assistance for public housing—here, too, the remedy is termination of tenancy (with the right to a pre-judicial grievance hearing). The statement here only accurately reflects the tenant-based rental assistance program.
3.4.1 (p. 20): Terminating Rental Assistance Under PIH Programs: It is stated here that termination can occur where a tenant refuses to report changes in income and family composition or refuses to repay excess rental assistance. If, however, a tenant has cooperated in providing the information or documents requested by the PHA to verify if there's a discrepancy, and has offered to enter into a reasonable repayment agreement, the tenant should not face termination. The terms of what is "reasonable" should not be "take it or leave it", but should involve reasonable give and take, taking into account the tenant's financial circumstances and what is reasonable to expect in terms of repayment. Moreover, a tenant should not face termination for past failure to report (except for cases of egregious fraud) if the tenant is willing to repay. Here again, "termination of rental assistance" is not the proper term for federal public housing.
3.4.1.1 (p. 20): Terminating Rental Assistance Under Public Housing: Again, there is no such thing as termination of rental assistance per se in public housing; instead, it is termination of tenancy and eviction.
3.5 (p. 20): Due Process: How will the independent verification by an officer or employee of such agency (i.e., HUD) be done in cases where the POA is not itself a state actor, like a PHA or state housing finance agency? Case law(and the plain terms of the statute) would make it appear that HUD itself needs to provide a review remedy—see Watson case from Federal District Court in Ohio.
3.5.1 (p. 20): Grievance Procedures: Here again, the terminology is confusing. For the tenant-based Section 8 program, there are no "grievance hearings"; instead, there are the informal hearing procedures required by 24 CFR 982.555 and the constitutional requirements of due process for a state actor. If, on the other hand, the POA is not itself a state actor, there are no "applicable state or local laws" related to due process. While the eviction process in most states would allow a tenant to dispute a termination, the statute appears to contemplate a process that the tenant may invoke to affirmatively dispute the determination that there is a discrepancy or that the computer match is accurate. Does this create a federal common law right against the private POA? Alternatively, as mentioned above, isn't there an independent duty of HUD to offer a dispute mechanism under the APA, where no state actor is involved? [Research issue here about what HUD ended up doing in this area on the non-citizen rule, where hearings are required to dispute determinations of non-citizen status.] In some states, as in Massachusetts, a state Fair Information Practices Act may apply against holders of federal data on tenants, be they state actors or private actors, and there may be a dispute mechanism available through a state entity. (Check if DHCD regulations clearly go so far in Mass.) However, this isn't universally going to be the case. Here again, this is the reason that formal regulations, with notice and comment opportunity through formal rule-making, would be valuable, as it would give HUD an opportunity to fully think this out.
3.5.3 (p. 21): Office of Housing: See comments above. It is completely unacceptable to say that private POAs "must refer to due process procedures required by state or local laws", as there may be none that apply to private actors, and simply resorting to the eviction process is not adequate, as it does not afford the tenant the opportunity to affirmatively dispute a determination before any court process is pursued.
Chapter 4 Discrepancy Resolution Status Reporting and Tracking
(p. 22): In the introduction, the dates need to be changed to reflect that the program has not yet started up. The same is true in Section 4.2, Reporting Discrepancy Resolution Activities.
4.2.4 (pp. 35-37): Tenant Discrepancy Resolution Status: In Figure 23 (p. 36), "Valid Discrepancy" includes "discrepancy valid based on tenant non-response"; later (see below at 4.2.4.2 (p. 38), Valid Discrepancy), it's suggested that POA use the data and treat it as undisputed due to tenant non-response. But the POA doesn't have the data, or shouldn't—if it did, this would violate the IRS disclosure requirements. Instead, this is a separate type of adverse action, such as termination of assistance or termination of tenancy due to failure to cooperate with providing information relevant to program eligibility. No calculation of the excess assistance owed, however, can be made.
Appendix A: We don't have the form letter examples that HUD is intending to send to tenants, and therefore can't comment on them. This is critical information for us to provide meaningful feedback on the implementation of the program.
Appendix D: Income Comparison Worksheets. In item #3 under the Directions, it's stated that for earned income, the POA should identify whether the income was excluded from the calculation of rental assistance based on program requirements, and that this includes "sporadic income". It's stated that any income that was excluded should not be used in the calculation of unreported income, and it should not be used in Section 4. As noted above, HUD guidance on what is excluded needs to be far clearer. Moreover, there may be exclusions from unearned income as well. To prevent POAs from missing these instructions, there should be a box, as with some other items, which forces a yes or no answer to the question, and diverts the case from being reported as a discrepancy depending on the response. Simply listing this in the long list of false positives on Figure 23 (p. 36) is not enough. Ideally, it would be a question somewhere prior to Section 2.4.5 of the Guide (pp. 11-12), and like boxes 1 and 2 in Sections 2.4.1 and 2.4.3 (pp. 10-11), would indicate that the income should not be included in the list and that if all discrepant income is excluded, there is no discrepancy.
Appendix F: Sample Head of Household Letters and Follow-Up Letters: See comments above regarding making sure that reasonable accommodation and linguistic access barriers addressed. For the initial and follow-up PHA letter, it is not accurate to say that the result is "termination of your rental assistance", and tenants will not understand this—instead, it is "termination of your public housing tenancy." Just as with the fact sheets, there should probably be three types of letters—one for federal public housing, one for tenant-based Section 8 (or Section 8's administered by a PHA, where PHA has the power to terminate rental assistance), and one for multifamily housing.
Appendix G: Sample Notification of Termination: Here again, for the PHA letter, it's not accurate to discuss termination of rental assistance for public housing, and this will just cause needless confusion. Instead, the terminology should be "termination of your public housing tenancy", and a slightly different letter should be used for Section 8. The public housing letter would refer to grievance rights, and the manner and time frame to invoke these; the Section 8 letter would refer to informal hearing rights, and the manner and time frame to invoke these. (Our experience is that PHAs may have very different procedures and time frames for the two programs.) For the multifamily letter, there needs to be reference to the due process procedures to dispute the termination or discrepancy; as noted above, in the case of a state actor (like an owner who is overseen by a state housing finance agency), there are likely to be procedures, but for purely private owners, there are not, and so a HUD remedy is likely as not required both as a matter of due process and to meet the statutory requirements.