Unique Differences & Common Issues with Subsidized Housing
Programs Part I
By: Chase Cooke – North Carolina Licensed Associate Attorney with Brownlee Whitlow & Praet, PLLC
Housing Choice Vouchers (HCV)
Governed by U.S. Department of Housing and Urban Development (HUD) guidelines, state law and the lease agreement.
The Housing Choice Voucher Program (HCV) likely affects the largest demographic of housing providers out of any
Subsidized Housing Program, as a Voucher can be placed at any property willing to participate in the program.
Vouchers are awarded and placed by Public Housing Authorities (PHAs) and create a separate contract with the housing provider called the Housing Assistance Payments (HAP) contract, which governs the portion of rent that will be paid by the
PHA vs. what the Resident pays. The Lease is still in full effect and governs the relationship between the housing provider
and Resident subject to any overriding provisions in the HAP contract. Even if the Voucher is taken away from the Resident,
the Lease would still continue. The housing provider must submit a Request for Tenancy Approval (RFTA) if interested in
having a Voucher placed at their property. This form will include most of the information the PHA needs to make its initial
determination as to whether the Voucher can be placed at that unit. When a Resident finds somewhere to place their
Voucher, the PHA will inspect the premises to ensure that it meets the minimum Housing Quality Standards (HQS). After
the Voucher is placed, the PHA must make biannual inspections and the housing provider and Resident are required to make
the premises available for inspection.
Portability:
An aspect that is unique to the Housing Choice Voucher Program when comparing it to the other Subsidized Housing Programs, is that the Voucher can be transferred to a different property, or in other words the Voucher “follows the
Resident”. There are properties across the Country that will accept residents with Vouchers and there is no jurisdictional restriction on where a Resident can transfer their Voucher.
Termination of Voucher by PHA:
If a Resident is evicted from the premises at which they placed their Voucher for a serious lease violation, the PHA must terminate the assistance. The following violations are certainly not a complete list of potential grounds for termination, but rather a good reference to start:
a. Scenarios requiring mandatory termination:
– Resident is evicted for a serious lease violation (mentioned under “Serious Lease Violations” below);
– A household member has been evicted from a federally subsidized housing program within the past 5 years; or
– A household member fails to submit required forms during recertification.
Termination of Tenancy by Housing Provider:
Residents that have placed a voucher at a property, may still be terminated and evicted by the housing provider. While
leases used in these scenarios may vary, all leases have to be approved by the PHA prior to the Voucher being placed,
and generally contain the same requirements as the Model Subsidized Lease, which is widely used. The following violations
are certainly not a complete list of potential grounds for termination, but rather a good reference to start:
a. Serious lease violations:
– Failure to pay rent and other amounts due;
– Criminal activity; or
– Misrepresentation of pertinent information when applying and/or recertifying.
b. Minor Violations:
– Unauthorized occupants;
– Failure to pay utilities;
– Damaging the property; or
– Failure to pay for repairs for damages to property.
While an isolated minor violation is not, on its own, enough for termination, repeated minor violations creating somewhat
of a “pattern” can amount to a serious violation giving grounds for termination. However, the housing provider needs to use discretion when making this decision as the burden of proving such a violation can be difficult.
The PHA will set a Payment Standard that governs the max amount of subsidy the PHA will provide, which is typically in the range of 90-110% of the Fair Market Rent (FMR). If the FMR of a unit is $1,500/month and the PHA elects to set the Payment Standard at 90%, then the maximum amount of rent that will be used to calculate the monthly rent under the Payment Standard will be $1,350/month. There are potential gaps created through this because the program also allows housing providers to charge a rent that exceeds the Payment Standard, as long as this higher amount complies with the PHA’s “rent reasonableness policy”. “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or
subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to
rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” 24 CFR 578.51(g).
Eligibility Requirements (2 Options governed by 24 C.F. R. § 982.201)
Option 1: Very Low-Income Family (<50% AMI)
Option 2: Low-Income Family (<80% AMI) and the family must meet ONE of the following requirements:
1. the family is continuously assisted under the 1937 Housing Act;
2. the family meets an additional eligibility requirement set by the PHA;
a. additional requirements must be specified in PHA administrative plan and must be consistent with local government plans within the PHA’s jurisdiction
3. the family resides in a HOPE 1 or HOPE 2 property as a non-purchasing family;
a. HOPE 1: HOPE for public housing homeownership
b. HOPE 2: HOPE for homeownership of multifamily units
c. Section 8(o)(4)(D) of the 1937 Act (42 U.S.C. 1437f(o)(4)(D))
4. the family is displaced due to prepayment of the mortgage or voluntary termination of an insurance contract
on eligible low-income housing; or
a. 24 C.F.R. § 248.101
5. the family qualifies for voucher assistance as a non-purchasing family under 24 C.F.R. §248.173.
Project Based Vouchers
The Project Based Vouchers Program (PBV) allows PHAs to allot certain amounts of their general voucher funding to issue contracts with participating housing providers, that attaches a Voucher to a specific unit. Contrary to the HCV Program mentioned above, these Vouchers do not follow the Resident and cannot be transferred in that sense. One unique aspect
that this creates is that the PBV Program allows for housing providers to receive HAP payments on vacant units, during turnover, as the unit is still being “held open” for a qualifying Resident, as long as the vacancy was not brought on by some
sort of wrongdoing on the part of the housing provider.
Rent levels contained in HAP agreements typically cannot be greater than 110% of the Fair Market Rent (FMR), however
there are scenarios in which HUD can set “exception payment standards” for certain areas. Please note that there are
unique connections between all these programs. For example, in certain situations a Low Income Housing Tax Credit (LIHTC) property that also has Project Based Voucher Units, may be able to charge rent that exceeds the 110% of FMR cap for
PBV Units based on the rents of the LIHTC units at the property not receiving any additional subsidy.
Eligibility Requirements
To be eligible, Residents must contribute 30% of their household income towards rent; otherwise, the PBV Program uses the same income targeting, HQS and inspection standards as the HCV Program mentioned above.
*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information in this article is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. Viewers of this material should contact their attorney to obtain advice with respect to any particular legal matter. No viewer of this material should act or refrain from acting on the basis of information in this presentation without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this article does not create an attorney-client relationship between the reader and Brownlee Whitlow & Praet, PLLC or any contributing law firms. All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.
