1. Presenter: Candace Mance, Pisgah Legal Services Date: January 10, 2014
Subsidized Housing
Presenter: Candace Mance, Pisgah Legal Services
Date: January 10, 2014

2. What is subsidized housing?
● Subsidized housing is a government system that includes direct payments to eligible recipients, as well as public or non-profit housing.
● The U.S. government believes that housing
should cost no more than 30 percent of a
individual's income. Housing costs above this
limit start cutting into other essentials, such as
medical and food budgets.

3. Types of Subsidized Housing
● Public Housing ● Tenant Based Section 8 ● Project Based Section 8 ● Rural Development ● Low Income Housing Tax Credit (“LIHTC”)

4. Public Housing
● Established by the U.S. Housing Act of 1937 ● Approximately 1.2 million households live in public housing ● Public housing units are managed by public housing authorities (“PHA”). ● Limited to low income individuals and families earning below 80% of the area median income (“AMI”). ● Rent is generally calculated at 30% of the individual/family adjusted income. ● PHAs are authorized to charge minimum rent between $0 and $50 regardless of how low an individual/family income may be

5. Tenant Based Section 8
● Section 8 rental assistance was enacted in 1974 ● The Section 8 Voucher Program is the largest of the Section 8 programs ● Known as the Housing Choice Voucher Program ● Administered by PHAs ● Tenants must have incomes which are less than 80% of the AMI ● Tenants generally pay approximately 30% of their adjusted income towards rent ● HUD/PHAs make an assistance payment to the landlord to cover the difference between the tenant’s contribution and the approved contract rate. ● Choice of housing and voucher are portable

6. Project Based Section 8
● Section 8 assistance attaches to the building ● Generally exists from a 20 year contract between a private owner and HUD which provides subsidies to cover the difference between HUD approved rent and tenant contribution ● Often managed by private companies.

7. Low Income Housing Tax Credit
● Currently the federal government’s primary method of producing and rehabilitating affordable housing ● Since its inception in 1986 more than 2 million units have been placed into service ● The program is run by the IRS ● THE LIHTC program allocates tax credits to each state on a per-capita basis

8. Low Income Housing Tax Credit
● Each state has an allocation agency and has adopted a qualified allocation plan
● Buildings have use restrictions
● Owners can either agree to 1 of the following restrictions: (1) at least 20% of the units must be occupied by tenants with incomes no higher than 50% of AMI or at least 40% of the units must be occupied by tenants with incomes no higher than 60% of AMI
● Rents for restricted units are set at 30% of household income for a tenant earning at the top of the relevant AMI category.
● Rents are flat rate that do not vary with an individual tenant’s income

9. Rural Development
● Established through rural development loans to private investors at below market interest rate in exchange for rural development regulated budget based rents ● Financed by the Rural Housing Services (“RHS”) under sec 515 of the Housing Act of ● Tenancy: very low, low, and moderate income families; the elderly; and persons with disabilities are eligible for tenancy of Section 515-financed housing. households.

10. Rules and Regulations
● The applicable rules and regulations depend on the program.
● Public Housing: HUD Handbook, Public Housing Occupancy Guidebook, Code of Federal Regulations, United States Code, Admission and Continued Occupancy Plan (“ACOP”), Lease
● Tenant Based Section 8: HUD Voucher Program Guidebook, Code of Federal Regulations, United States Code, Local Administrative Plan, Local PHA 5 year plan, Housing Assistance Payment Contract (contract between landlord and PHA), Tenancy Addendum between landlord and tenant, Lease

11. Rules and Regulations
● Project Based Section 8 –HUD Handbook, Code of Federal Regulation, United States Code ● LIHTC –Revenue Rulings, procedures issued by the IRS, United States Code ● Rural Development – rules promulgated by the RHS, Code of Federal Regulations, HUD Handbook

12. Identifying the Proper Program
● Often a tenant/client will not know what type of program they fall under. Accordingly, it is necessary for you to identify the applicable housing program. ● Things to consider: (1) who is the landlord; (2) has the client been dealing with a PHA; (3) does the client have any documentation reflecting the type of program or right to a grievance hearing; (4) does the lease reveal the subsidy program; (5) what is the client’s level of rent (30% of income is likely section 8 or public housing).

13. Common Tenant Issues
● Admissions
● Evictions and Subsidy Terminations

14. Admissions
● Public Housing – PHA may adopt local preferences such as working families, homeless, victims of domestic violence. ● PHA admission criteria is set forth in the ACOP ● PHA must deny admission: (1) where household member has been evicted from subsidized housing w/in 3 years for drug related activity; (2) applicant is currently engaged in illegal use of drugs; (3) household member has been convicted of methamphetamine production in federal subsidized housing; (4) household member is a registered lifetime sex-offender. ● In its discretion, a PHA may develop standards for screening for violent criminal activity, alcohol abuse, poor tenant history. ● If denied, applicant must be notified and have opportunity to contest in informal hearing (grievance hearing)

15. Admissions
● Tenant based Section 8 – Admission criteria set forth In administrative plan ● Two levels of screening: (1) by PHA to screen for eligibility. Admission screening essentially the same as for public housing; and (2) screening by landlord. Note – there are no federal regulations governing the landlord’s screening. ● Project Based Section 8 – May have preferences such as elderly or designated occupancy (disabled). Projects are permitted to screen for criminal activity and poor tenant history. Many projects look at credit scores.

16. Admissions
● Rural Development – May have preferences or designated occupancy (elderly/disabled). Permitted to screen for criminal activity.

17. Adverse Admission Decisions
● All applicants for public housing, tenant based Section 8, and HUD assisted and subsidized housing are entitled by regulations and due process to a review if they are rejected for admission, removed from a waiting list, or treated adversely under a non-citizen rule. ● The nature of review varies for each program but generally involves the right to be heard, to present evidence, to be represented, and to receive a written decision with reasons based on the evidence in the record. ● Note – applicants denied a preference are not entitled to an informal hearing

18. Evictions and Subsidy Terminations
● For public housing and almost every HUD subsidized rental housing program, tenants cannot be evicted without good cause. ● An exception to good cause exists for Tenant Based Section 8 at the end of the lease term. At the end of the lease term no cause is required to terminate the lease. The landlord may simply choose not to renew lease.

19. What is Good Cause. Public Housing (42 U. S. C. §1437d and 24 C. F. R
What is Good Cause? Public Housing (42 U.S.C. §1437d and 24 C.F.R. Part 966)
● These statutes require PHAs to utilize leases which require that the lease may not be terminated except for serious or repeated violation of the terms of the lease or for other good cause.

20. Good Cause
● Good cause includes violation of material lease terms such as: (1) Failure to make payments due under the lease; (2) Failure to fulfill household obligations such as keeping the dwelling in a clean and safe condition, refraining from destroying the unit, engaging in criminal activity that threatens the health and safety of other residents; refraining from engaging in drug related criminal activity on or off the premises; (3) Being over the income limit for the program …

21. Other Good Cause
● Other good cause : (1) criminal activity or alcohol abuse; (2) discovery of facts that make the tenant ineligible; (3) discovery of material false statements or fraud by the tenant in connection with the application for assistance or reexamination of income; (4) failure of tenant to accept the PHA’s offer of a lease revision after written notice at least 60 days before its effective date; (5) failure of a tenant or family member to comply with the community service requirements. NOTE – this only applies with a non-renewal of the lease at the end of the term.

22. What is Good Cause. Tenant and Project Based Section 8 (24 C. F. R
What is Good Cause? Tenant and Project Based Section 8 (24 C.F.R. 247, HUD Handbook)
● Pursuant to the statutory provisions and the HUD Handbook, a HUD subsidized landlord cannot evict a tenant without good cause. ● A subsidized landlord may only terminate a tenancy for material non-compliance with the rental agreement.

23. Good Cause = Material Non-Compliance
● Defined as: (1) one or more substantial violations of the lease; (2) repeated minor violations of the lease (requires a pattern of violations); (3) failure to timely supply information for interim and annual recertification; (4) providing incomplete or inaccurate information to allow the landlord to verify income and family composition; (5) non-payment of rent (except where payments are made within the grace period); (6) material failure to carry out obligations under any state landlord tenant act; (7) drug related criminal activity; (8) illegal drug use; (9) alcohol abuse; (10) criminal activity that threatens the health and safety of other residents; (11) fleeing to avoid prosecution; (12) violation of a condition of probation; (13) other good cause

24. Other Good Cause
● There is no regulatory definition of other good cause. However a landlord must give prior notice that the conduct could lead to termination of the lease.
● If a landlord chooses to terminate for “other good cause,” the termination can only take effect at the end of the lease term.

25. What is Good Cause. Rural Development (HUD Handbook 4350. 3, 7 C. F. R
What is Good Cause? Rural Development (HUD Handbook , 7 C.F.R. § (a), (d))
● A Section 515 Rural Development owner may evict for failure to sign consent forms for obtaining wage and claim information; failure to establish citizenship or eligible immigration status; criminal and alcohol related activity. ● Eviction may also take place for good cause, material non-compliance with the lease or other good cause

26. Good Cause and Material Non-Compliance
● Includes substantial or repeated violations of lease provisions or occupancy rules ● Non-payment or repeated late payment of rent or other financial obligations ● Drug related criminal activity – Note the Section 515 regulations require the activity to take place on the premises ● Actions prohibited by state and local laws ● Actions by tenants or household members resulting in substantial physical damage causing adverse financial effect on the housing or property of other persons ● Actions which threaten the health and safety of other persons or the right of other persons to enjoyment of the premises and related facilities.

27. What is Good Cause? LIHTC
● The owner of an IRC §42 property must be able to demonstrate if challenged in state court that good cause existed to support the eviction or termination of a tenant from a low-income unit. For purposes of IRC §42(h)(6)(E)(ii)(I), good cause is determined by the state and local law applicable to the location in which the IRC §42 property is located.

28. Procedural Requirements for Termination
● Prior to eviction from subsidized housing tenants are entitled to (1) the right to adequate notice of the grounds for the eviction and (2) an opportunity to be heard, including (in some cases) the right to be heard before commencement of court proceedings.

29. Public Housing Requirements
● Tenants must receive a written notice stating the specific grounds for termination; inform the tenant of the right to respond; inform the tenant of the right to review documents; inform tenant of right to request a grievance hearing if applicable.
● If a grievance hearing is not required the notice should state that the tenant is not entitled to a grievance.
● The notice must do more than state a specific section of the lease that has been violated. The notice must indicate the factual circumstances giving rise to the violation in sufficient detail to inform the tenant of unfavorable evidence to enable the tenant to prepare a defense.

30. Section 8, Rural Development & LIHTC
● Project Based Section 8/Rural Development - tenant is entitled to notice that states the date that the tenancy will be terminated, state the reason for eviction with specificity, inform the tenant that the landlord cannot evict without bringing an eviction action, advise the tenant that they have 10 days to discuss the proposed termination with the landlord, advise persons with disabilities that they have the right to request reasonable accommodations to participate in the meeting with the landlord. ● Tenant Based Section 8 – Landlord must give written notice. Content of notice governed by state law. ● LIHTC – no federal statutes or regulations governing the content of the notice. State law and lease terms governs.

31. Grievance Procedures
● Public Housing – Held at request of the tenant. Can be requested where tenant has received notice of proposed adverse action, including termination of lease or evictions and denial of admission. Note – grievance hearings may be exempted for evictions involving criminal activity.
● Tenant Based Section 8 – Tenants and applicants must be notified of proposed adverse action and the right to request informal review.
● Project Based Section 8 – informal meeting with management prior to final rejection of admission or eviction/termination notice.
● Rural Development - – informal meeting with management prior to final rejection of admission or eviction/termination notice.
● LIHTC – none required by statute or regulation. Some communities may choose to follow the requirements of Project Based Section 8.

32. Notice Period
● Public Housing – 14 days written notice of proposed termination for non-payment of rent. 30 days or shorter period based on state law for all other reasons. ● Project Based Section 8/Rural Development – Notice period governed by lease and state law. In cases where termination is for other good cause the tenant must be given 30 days notice and the termination cannot take place until the end of the lease. ● Tenant based Section 8 – HUD regulations do not specify a minimum notice period. Notice is governed by state law. ● LIHTC – no federal statutory or regulatory requirements regarding notice period. State law governs.

33. Defenses
● Procedural Failures – Notice is insufficient – content is incorrect or notice period is incorrect.
● Lack of Good Cause – termination is being sought for reasons that are not good cause or material non-compliance

34. Defenses Con’t
● Waiver – Landlord has lost the right to evict. ● Ex. Continuing to accept rent or partial housing subsidy while seeking eviction. See Community Housing Alternatives, Inc. v. Latta, 87 N.C. App But see Woodridge Homes, L.P. v. Gregory, 205 N.C. App.365. ● Note – pursuant to N.C.G.S. §42-26(c) – in an action for ejectment based on G.S (a)(2) the lease may provide that the landlord’s acceptance of partial rent or partial housing subsidy payment does not waive the tenant’s breach.

35. Criminal Activity
● In most cases a grievance is not required and will not be offered to the tenant.
● In public housing, tenants often receive 72 hour notices for drug and violent criminal activity.
● Acceptance of rent with knowledge of illegal activity does not preclude eviction. See N.C.G.S. §42.73.
● Defense of waiver typically does not apply unless the housing authority fails to notify the tenant within 120 days that a violation has occurred or take steps to remedy the violation. See N.C.G.S. §157-29(d).

36. Practical Tips ● Know which type of subsidy you are dealing with;
● Consult the applicable rules and regulations
● Check your notice
● Request grievance hearings if applicable
● Consider Defenses: improper notice/procedural defects, lack of good cause, waiver

37. Questions