HUD filed an amicus brief through the U.S. Department of Justice to the Court of Appeals in the Third Circuit supporting a tenant’s position that the enhanced voucher (EV) statute requires owners to have good cause to not renew a lease. HUD has long interpreted the EV statute to provide tenants with the right to remain in their homes at the end of a lease term. A trial court had ruled that good cause is not required, and the Third Circuit upheld that decision two to one. In response to the dissenting judge, however, the Third Circuit granted a rehearing, scheduled for May 16.
Enhanced Vouchers (EVs) 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 a 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 and the new market-based rent charged by the owner after the housing conversion action, even if that new rent is greater than the 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.
The brief provides a statutory history of the EV statute, which is at Section 8(t) [42 U.S.C. §1437f(t)]. In 2000, the statute was amended to include the clause, “the assisted family may elect to remain.” HUD’s interpretation of that clause has been reflected in policy guidance since 2001, including Notice PIH 2001-41 and Chapter 11 of the Section 8 Renewal Policy: Guidance for the Renewal of Project-Based Section 8 Contracts.
Pine Street Associates declined to renew Theodore Hayes’s project-based assistance contract on January 17, 2009. Later that year, the apartment was sold to Phillip Harvey, who entered into a lease with Mr. Hayes, agreeing to accept an EV. In early 2015, Mr. Harvey notified Mr. Hayes that he would not renew the lease when it expired in April. In response to a lawsuit brought by Mr. Hayes, Mr. Harvey asserted that the statute did not limit his ability to evict Mr. Hayes when the lease expired. The district court agreed with the owner.
On appeal, the Third Circuit affirmed the district court decision two to one. The dissenting judge explained that the “may elect to remain” clause by its plain text provides an assisted household with the right to remain, and that language necessarily limits a landlord’s ability to evict tenants at will at the end of a lease. The judge added that the majority’s interpretation of the statute as only obligating HUD to provide EVs rendered Congress’s addition of the “may elect to remain” language meaningless if the owner retained unfettered authority to decline to renew a tenant’s lease. The judge added that the majority’s interpretation was at odds with a Ninth Circuit decision and with the decisions of every district court that had previously considered the question. As a result, the Third Circuit granted a rehearing and invited HUD to file an amicus brief.
HUD’s brief cites report language from the House committee that inserted the “may elect to remain” clause. The clause was added to “clarify that the 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.” Senate report language explained that the purpose of EVs is to “allow tenants to continue to maintain their homes where the owners of their rental units have raised rents after rejecting renewal of project-based contracts.” The Conference Report stated that the new language would “protect existing residents of Federal-assisted housing from being forced to move from their homes.”
HUD also reasons that owners of units that received Section 8 project-based rental assistance contracts received extensive financial assistance from the federal government in the form of years-long assistance payments and/or subsidized mortgages and insurance. Therefore, the federal government’s long-term investment in a property that later receives EVs justifies placing a limit on an owner’s right to displace households. HUD also cites Senate report language indicating that it created the EV program in part “to protect the [government’s] massive previous investment in public housing.”
More information about EVs is on page 4-52 of NLIHC’s 2018 Advocates’ Guide.