Tenants in the Village of Kaufman HUD subsidized development in Texas have been financially shortchanged for years.  HPP is working to correct that, and also to determine if this is a larger problem across the country.

Tenants in project-based Section 8 rental housing pay no more than 30% of their income for rent.  Federal law also considers utilities tenants have to pay to be part of that 30% payment so tenants in such circumstances receive a utility allowance (effectively reducing their rent) based on the cost of reasonable utility usage.  Because utility costs regularly rise, owners of project-based Section 8 are obligated to apply to HUD to regularly update utility allowances (UA).  When tenants at Kaufman Village discovered that their owner AIMCO had failed to update their UAs for years, they sought HPP’s help.  Working with the residents and the Texas Tenants Union, HPP convinced the owners and HUD a substantial upward UA adjustment was needed.  Neither AIMCO nor HUD was willing to go back and account for previous years, however.

In 2010, HPP filed a class action on behalf of the residents, seeking compensation for failure to update UAs between at least 2000 and 2008.  We estimate that tenants have thus been overcharged in rent during this time in excess of $200,000.  HUD moved to dismiss, asserting that the failure to update UAs was solely the fault of the owners.  The Court recently denied HUD’s motion, however, finding that during the one time that AIMCO did seek a UA adjustment, HUD failed to act properly on the request.  As of this writing in August 2010, all parties have agreed to meet with the federal magistrate to attempt to settle the case.  We’re hopeful that at long last the tenants will soon realize the compensation they deserve.

In the course of our work on this case, however, we have received indications that the failure to update UAs might not be an isolated problem.  Working with allies across the country, HPP is currently investigating whether this failure to update UAs is a systemic problem.