HRA sued over rents

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Poor people are being forced to pay higher rents through an agency that could use other options to keep the payments down.

That’s the thrust of a lawsuit filed by two tenants in U.S. District Court against the Douglas County Housing and Redevelopment Authority (HRA) and U.S. Department of Housing and Urban Development (HUD).

The lawsuit was also filed against Jeffrey Schiffman in his official capacity as the executive director of HRA. The lawsuits were filed due to substantial rent increases and decreased rental subsidies.

When asked to comment on the lawsuit, Jessica Schwie, the attorney representing the HRA and Schiffman, said the Douglas County HRA has had to make some difficult decisions in these trying times.

“It is a non-profit entity that took action, and is continuing to take action, to maintain fiscal stability while meeting the needs of all applicants to its program,” said Schwie. “Therefore, it denies the allegations made by the plaintiffs and their counsel and will take appropriate action to defend its actions.”

HERE’S WHAT HAPPENED

In August, HRA Board of Commissioners met and adopted an updated HRA Agency Plan.

As part of the new plan, HRA Section 8 voucher holders in Douglas County received notice that their rent would be increasing.

HRA adjusted the rent payment standard, which is the amount of total housing expenses, including rent to the owner, plus any tenant paid utilities, set by HRA based upon fair market rents. Adjustments were also made to occupancy standards.

Previously, the HRA-approved payment standard for a two-bedroom home was $621 per month. Under the new plan, the approved rent is $559 per month – a difference of $62 per month or $744 per year.

The Section 8 voucher program is designed in part to provide decent, safe and sanitary housing for very low-income families while maintaining their rent payments at an affordable level.

THE LAWSUIT

According to Sherry Bruckner with Legal Services of Northwest Minnesota, the Douglas County HRA stands to make a significant profit from the changes.

She said HRA’s own financial projections for this year indicate that the subsidy reduction will leave the HRA with at least $66,000 in reserves at year’s end. If the HRA had not implemented the subsidy reduction, noted Bruckner, about $30,000 of reserves would have been required to cover the extra costs, and would still leave the HRA with about $36,000.

Bruckner added that HRA’s attorneys were challenged on October 15 to produce competent evidence challenging these conclusions. Bruckner said so far, there has been no response.

Bruckner said that the lawsuit states that HRA and Schiffman violated federal law when they:

• Implemented the subsidy standard change immediately rather than waiting for two years as federal regulations require.

• Failed to consider the adverse impact on the tenants caused by a change in rent payment standards and occupancy standards.

• Failed to use any administrative reserves before implementing any changes in the rent payment and occupancy standards.

• Failed to establish a resident advisory board and to submit agency plan changes to the resident advisory board as required by federal law.

Bruckner noted that, “The tenants also claim HUD acted arbitrarily and capriciously by approving the plan even though HRA failed to follow HUD’s own directive and use its administrative reserves.”

She added the changes meant more than 40 percent of tenants would have rent that exceeded 30 percent of their income, which violates the purpose behind the subsidized housing program.

The parties, according to Bruckner, have temporarily agreed that rent for the two tenants who filed the lawsuit will not increase during the pending litigation.

The plaintiffs intend to seek a judgment in January, which would declare the actions of the HRA and HUD to have been illegal. It is likely that such a judgment would ultimately be applied to benefit all of HRA’s voucher clients who suffered the resulting rent increases.

WHO’S REPRESENTING WHOM?

The tenants are represented by Jack Cann, a federal litigator with the Housing Preservation Project in St. Paul and Bruckner, an attorney with Legal Services of Northwest Minnesota. HRA and Schiffman are represented by Schwie, an attorney with Jardine, Logan and O’Brien from St. Paul. HUD is represented by the U.S. Attorney’s Office.

BRUCKNER’S STATEMENT

“Although we requested HRA’s [of Douglas County] attorney to produce competent evidence challenging our conclusions more than one month ago, we have still received no response. In the meantime, more families are facing the stressful consequences of $176 per month rent increases. As more households leave the program each month, we can only anticipate that HRA’s reserves will continue to grow.”

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