The U.S. Court of Appeals for the Third District voted 11-1 confirming that the statute that created enhanced vouchers (EVs) provides assisted tenants the right to remain after an owner of private, HUD-assisted housing decides not to renew a Section 8 project-based assistance contract. In Hayes v. Harvey, the District Court, a lower court, agreed with the owner, Philip Harvey, that the statute’s right to remain did not apply at the end of Theodore Hayes’ lease term. The Appeals Court had upheld the District Court decision two to one. However, in response to the dissenting judge, the Appeals Court granted a rehearing (see Memo, 5/7). The Appeals Court reversed the District Court on August 31, based on the statute’s plain language and history that make it evident that EV households may not be evicted without good cause, even at the end of a lease term.
Enhanced Vouchers are provided to tenants living in properties with private, project-based assistance when a “conversion action” takes place, such as when a project-based Section 8 contract expires and the owner decides to “opt out” and not renew the contract. Prepayment of certain unrestricted HUD-insured mortgages (generally Section 236 and Section 221(d)(3) projects) is another type of conversion action.
Enhanced Vouchers have two special features that make them “enhanced” for residents:
- A household receiving an EV has the right to remain in their previously assisted home, and the owner must accept the EV as long as the home continues to be used as rental property. Instead of accepting an EV, a household may move right away with a regular voucher. If a household accepting an EV chooses to move later, its EV converts to a regular voucher.
- An EV pays the difference between a tenant’s required contribution toward rent (generally 30% of adjusted income) and the new market-based rent charged by the owner after the housing conversion action, even if that new rent is greater than the public housing agency’s (PHA’s) basic voucher payment standard. A PHA’s regular voucher payment standard is between 90% and 110% of the Fair Market Rent (FMR). EV payment standards must be adjusted in response to future rent increases.
In 1982, Florence Hayes and her son Theodore rented a project-based Section 8 unit at Washington Square East in Philadelphia. A few years later they were joined by Aqeela Fogle, Florence’s granddaughter. In early 2008, the owners of Washington Square East decided not to renew the project-based Section 8 contract, and the Hayes family, which now included Aqueela Fogle’s three children, began receiving EVs. In 2010 the property was sold to Philip Harvey who signed a Housing Assistance Payment contract. The parties renewed the lease in 2011 and 2013 for two years. In February 2015 Florence Hayes died, and the Philadelphia Housing Authority transferred the head of household status to Theodore. But, two weeks later, Mr. Harvey notified Mr. Hayes that he did not intend to renew the lease for three reasons: the death of Florence Hayes, Harvey’s desire to renovate the unit, and his intent to move his daughter into the renovated apartment.
The District Court ruled in favor of Harvey in 2016, reasoning that the EV statute did not require property owners to renew the leases of EV households. The District Court wrote that the EV statute merely required HUD to provide additional rental assistance (above the PHA payment standard) to a tenant who remains. The Appeals Court disagreed, stating that the plain language of the first clause of the statutory provision [§ 1437f(t)(1)(B)], read in context, does, in fact, provide EV households with a right that is enforceable against landlords, and that tenants may be evicted only for cause, even at the end of a lease term.
The Appeals Court notes that as originally passed in 1999, the EV statute only provided for the augmented payment standard intended to protect a tenant from having to pay market rent. The Appeals Court continues, highlighting Congress’ modification of the EV statute text one year later in 2000. Congress added what is now the first clause, “the assisted family may elect to remain in the same project in which the family was residing on the date of the eligibility event for the project, and if, during any period the family makes such an election and continues to reside, the rent…” (emphasis added)
The Appeals Court writes that that first clause is written from the tenant’s perspective, focusing on the verbs “elect” and “remain,” commenting that the assisted family’s right to remain would be meaningless if it was not enforceable at the end of the lease term. The Appeals Court continues, “Thus if the enhanced voucher holders’ right to ‘elect to remain’ limited property owners’ rights during only the lease term, the first clause of the provision would have no independent meaning; it would describe what is already true. It is, however, a well-established canon of statutory interpretation that ‘statutes should be read to avoid making any provisions superfluous or insignificant.’”
The Appeals Court also cites Congressional intent as reflected in the Conference Report. Congress modified the statute in 2000 in order to “clarify…that assisted families continue to have the right to elect to remain in the same unit of their project if that project is eligible to receive enhanced vouchers.” The Appeals Court also cited various HUD guidance documents going back to 2001 that require landlords to renew leases of EV households, such as the Section 8 Renewal Policy: Guidance for the Renewal of Project-Based Section 8 Contracts. Finally, the Appeals Court cited other court decisions, particularly the Ninth Circuit’s Park Village Apartment Tenants Association v. Mortimer Howard Trust.
The Appeals Court, however, remanded to the District Court the issue of “good cause,” to decide whether Harvey has a “good cause” for not renewing the lease. Harvey stated that he wanted to move his daughter into the Hayes unit. The EV statute does not define “good cause.” The Appeals Court notes that the tenant-based voucher regulations define “good cause” to include an owner’s desire to use a unit for personal or family use. The project-based voucher regulations do not include an owner’s desire to use a unit for individual or family use.
In addition to HUD filing an amicus brief (see Memo, 5/7) amici were submitted by the City of Philadelphia, the Philadelphia Housing Authority, and various local and national nonprofit and legal services organizations.
The opinion is at: https://bit.ly/2MrwNu3
More information about Enhanced Vouchers is on page 4-52 of NLIHC’s 2018 Advocates’ Guide