When Congress directs federal agencies to cut funding under federal programs, the ways those cuts are imposed can get highly complicated, and in some cases, also disastrous, unfair, and illegal. In one case, the Minneapolis Public Housing Authority (MPHA) lost $2.8 million in HUD funding, drastically reducing its ability to serve extremely low income families and individuals in its public housing and Section 8 voucher programs.
This story begins in 1998 when HUD (The Department of Housing and Urban Development) invited MPHA to join the Moving to Work (MTW) program, which essentially provides housing authorities considerably more flexibility in the administration of public housing and voucher programs. MPHA agreed to join MTW, relying in part on HUD’s assurance that it would not be penalized financially by virtue of its status as a MTW participant. This assurance came both in the MTW statute and in MPHA’s contract with HUD.
In 2012, at HUD’s request, Congress provided in the 2012 Appropriations Act that HUD should recapture “excess” operating reserves from housing authorities, meaning financial reserves that HUD determined were in excess of what was necessary. MPHA in fact did not have any excess reserves under HUD’s definition for public housing programs, but HUD imposed a different standard for MTW agencies, reducing operating subsidies automatically, whether excess reserves existed or not. In short, MPHA was financially penalized to the tune of $2.8 million, by virtue of its status as a MTW agency, in violation of the anti-discrimination promise of both the statute and HUD contract.
After MPHA repeatedly tried to get HUD to reconsider without success, MPHA hired HPP and the law firm Eckland & Blando to file suit in the federal Court of Claims. The case is now pending (April 2014).