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10.19.2012 - HPP
Sometimes a phone call
asking a simple question can lead to big things. In 2007, HPP received a phone call from a
tenant organizer working with low income residents in a rural Texas HUD Section
8 project. She had noticed that the
residents' utility allowances had not been updated in years, and wondered what
could be done.
In Section 8 projects,
tenant rent payments are limited to 30% of income. Rent includes utilities, which means that
where tenants pay utilities themselves, they are provided a "utility
allowance," which reduces their rent payment dollar for dollar. Because utility costs generally increase over
time, it is important that utility allowances get regularly updated; if the
allowance fails to track with increasing utility costs, the net effect is that
tenants are paying too much in rent.
Working with the Texas Tenants Union, HPP began representing the residents of Village of Kaufman, and
discovered utility allowances (UAs) had not been updated in a decade. We
convinced the project owners to update the UAs and adjust rents, but they
refused to address the earlier years where they had been overcharging rents as
a result of the inadequate UAs. On
behalf of the residents HPP filed suit against AIMCO, the owners, and HUD, to
recover for excess rent charges. The
court rejected a HUD motion to dismiss, and then the parties negotiated a
settlement. In the end, the residents
received close to $200,000 in compensation.
As one resident put it, "this was just very nearly a miracle."
But there was more than simply this happy
ending. In the course of the lawsuit,
HPP lawyers discovered that HUD directives to Section 8 property managers to
update utility allowances were not consistent.
Although HUD had explicitly required most Section 8 projects to update
UAs, there was a large category of these projects where HUD guidelines were
silent on this important issue. HPP
began working with the National Housing Law Project and the Shriver Center in
Chicago to investigate further. We
discovered in a survey that property managers for this group of projects
frequently were unaware of any obligation to update UAs and therefore did not
do so. HPP, NHLP and Shriver brought
this to the attention of the national HUD Office, but there was no
response. Finally, the same three groups
wrote to HUD threatening legal action unless HUD took immediate action to
remedy the problem. This finally caught
HUD's attention, resulting in the issuance of a national directive to this group
of Section 8 properties clearly requiring the regular updating of UAs. We estimate this policy change affected some
7000 HUD projects nationally, covering over 200,000 tenants—most of whom should
now enjoy increased UAs, and decreased rents.
October 2012