Once tenants receive highly sought after Section 8 vouchers, they are usually thrilled, because it means they can count on a rent payment that won’t exceed 30% of their income.  Tenants in Douglas County, Minnesota (Alexandria area) received a rude shock this fall, however, when they learned their voucher wouldn’t stop a huge rent increase.

For the last few years, uneven funding of the Section 8 voucher program at the federal level has meant that some housing authorities administering the program have run into financial trouble.  In some cases these PHAs responded by terminating families on Section 8, in order to balance their budgets.  As a result, HUD adopted a policy which provided that when PHAs encounter financial trouble in their voucher program, they must consider a host of means to cut costs, turning to those cost-cutting measures that affect tenants only as a last resort.

Throughout 2010, the Douglas County HRA became increasingly concerned that it lacked the funding to continue to fully fund its Section 8 voucher program.  In the summer it concluded that it could only bring its budget into balance by two cost cutting measures that shifted costs on to tenants participating in the program.  One change came in the form of reducing the subsidy payment on behalf of the family from 100% of fair market rents to 90% of fair market rents.  The other change involved changing occupancy standards, readjusting the unit size to be subsidized to smaller units, which left families with the choice of either covering the subsidy gap themselves or trying to break their leases to move to a smaller unit.  The combined effect of these two changes meant many families were hit with a rent increase amounting to over two hundred dollars over the course of the fall.

The tenants’ lawyer sought help from HPP.  We investigated and determined that the HRA budget in fact did appear to have sufficient funding to avoid this drastic shift of costs to tenants, and together with the tenants’ lawyer, we filed suit on behalf of two tenants.  Shortly after filing suit, we suggested a settlement meeting with the HRA and HUD.  The outcome resulted in an agreement in which the HRA reconsidered, and agreed to revoke its change in the payment standard, not just for the two plaintiffs but for all tenants in the program, starting with December rent.  The HRA also agreed that, as a reasonable accommodation of their disabilities, the two plaintiffs and their children could properly occupy a two bedroom unit, as the rules originally allowed.  

This case illustrates the importance of stable funding for the Section 8 program, and of careful management of that funding by the local Section 8 program.  It also points up that sometimes local PHAs leap too quickly to solutions which shifts costs unnecessarily to tenants, and why it’s important that tenants have advocates to review these decisions.  

Click on the following links to view the complaint and the settlement agreement.