In September 2010, the Third Circuit Court of Appeals handed tenants a major victory in their fight to preserve the affordability of their apartments. HPP had a hand in the effort by filing an amicus brief on behalf of the tenants.
In 2006, the U.S. Department of Housing and Urban Development (HUD) lost patience with a Pittsburgh Section 8 apartment building plagued by repair issues, and as the property moved into foreclosure, HUD decided to pull the plug on the project’s Section 8 contract. This meant that even though the building would continue to house tenants after foreclosure, current and future residents would lose their subsidies and face much steeper rents. HUD has a long history of terminating Section 8 contracts for projects in foreclosure, despite the fact these buildings continue to be a critical affordable housing resource as they come back out of foreclosure. As a result, for the last few years Congress has included a provision in its annual appropriations acts commonly referred to as the “Schumer Amendment.” This amendment generally obligates HUD to continue the Section 8 contract in most cases for properties going through foreclosure, ensuring the ongoing affordability of these buildings.
Despite the Schumer Amendment, HUD continues to terminate Section 8 contracts, this Pittsburgh project being the latest example. This time the tenants decided to fight back, filing suit (with HPP providing assistance to the tenants’ lawyer). HUD made multiple technical arguments as to why the Schumer Amendment did not apply, and the District Court backed HUD, dismissing the case. The tenants appealed. The Third Circuit Court of Appeals reviewed each HUD argument and sided with the tenants in each case, reversing the lower court and holding the Schumer Amendment applicable. The Court also determined that HUD had failed to provide proper relocation assistance to displaced tenants under the Uniform Relocation Act.
This case illustrates a not uncommon problem, Congress might write a law to address a problem, but sometimes that law gets evaded until someone gets the law before a Court to properly interpret it. This decision should go a long way to ensure Section 8 contracts continue for these multifamily buildings by rejecting the numerous arguments HUD has raised to avoid the law.
To read the opinion, Massie v. HUD, click here.