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HUD Expands Tenant Notice Requirement for Section 8 RenewalIt has come to our attention that HUD has directed certain Project Based Section 8 contract administrators to expand the applicability of the tenant notification requirement relating to owner applications for rent increases where the owner is seeking Section 8 rent increases of any sort. 3/24/2006 Open PDF: HUD Expands Tenant Notice Requirement for Section 8 Renewal The notice is a 30-day notice to tenants with an opportunity for comment. The owner must then certify that the notice was provided. The relevant regulation regarding “Notice to Tenants” is found at 24 CFR 245.310 and is intended to be required where an owner is seeking a budget-based rent increase in the context of a HUD subsidized development that has non–Section 8 tenants. For example, in Section 236 or 221(d)(3) building which has non–Section 8 tenants that applies for a budget based rent increase, if granted, the rent increase will impact on the non–Section 8 tenants. The Section 8 tenants are generally not impacted since the tenant will continue to pay a maximum of 30% of their income as adjusted for number of rooms and family size, whereas the nonsubsidized tenants pay the entire rent out of pocket and are therefore given notice and opportunity to comment and receive answers to their comments before HUD will approve the increase. Recently, without any formal notice or proposed regulatory amendment from HUD, but per HUD direction, certain contract administrators have been requiring owners seeking rent adjustments to comply with the tenant notice and comment process pursuant to 24 CFR 245.310, before they will process the rent adjustment and renewal. This practice raises several concerns, including that this conflicts with MAHRA which generally requires the secretary to renew HAP contracts and provide certain adjustments at renewal. This leads to the conclusion that a MAHRA adjustment is a matter of right, and tenant comments are therefore irrelevant. The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct. |
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ServicesAffordable Housing |
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