Revision of Tenant Participation Requirements, HUD Notice H 2016-05

Revision of Tenant Participation Requirements, HUD Notice H 2016-05

 

On March 31, 2016, HUD published Notice H 2016-05, Revision of Tenant Participation Requirements.

 

This notice restates requirements originally issued in Notice H 2014-12 and revises penalties for non-compliance. This revised notice expands the types of properties that may be assessed civil money penalties to include non-insured projects that have a project-based Section 8 contract that has been renewed under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA).

 

Applicability

 

This notice applies to any mortgagor or owner of any multifamily housing project that meets any of the following:

1. Projects subject to a HUD-insured or Secretary held mortgage under the National Housing Act;
2. Section 236 projects;
3. Section 221(d)(3) and (d)(5) Below Market Interest Rate (BMIR) insured projects;
4. The Rent Supplement Program;
5. The Section 8 Loan Management Set-Aside (LMSA) program;
6. State or local housing finance agency projects that receive assistance under Section 236 or Rent Supplement, but does not have a HUD-insured mortgage;
7. Properties with project-based Section 8 (does not include Project-based vouchers);
8. Projects with enhanced vouchers under the Low-Income Housing Preservation and Resident Homeownership Act of 1990, the provisions of the Emergency Low-Income Housing Preservation Act of 1987, or the Multifamily Assisted Housing Reform and Affordability Act of 1997;
9. Section 202 Direct Loan Program or the Section 202 Supportive Housing for the Elderly Program; and

• Section 811 Supportive Housing for Persons with Disabilities Program.

 

Rights of Tenants & Tenant Organizations

 

The notice makes it clear that tenants have the right to establish and operate a tenant organization for the purpose of addressing issues related to their living environment as well as activities related to housing and community development. A tenant organization is considered legitimate if it meets regularly, operates democratically, is representative of all residents in the development, and is completely independent of owners, management, and their representatives. The organization does not have to have a specific structure, written by-laws, elections, or resident petitions.

 

Owners and/or management agents are required to provide the head of household with a copy of the “Residents Rights & Responsibilities” brochure at move-in and annually at recertification. This brochure addresses tenant rights to organize.

 

Protected Activities

 

Owners must permit tenants and tenant organizations to undertake the following activities:

 

1. Distribution of leaflets in lobby and common areas, under tenants doors, and posting of information on bulletin boards;
2. Initiation of contact with tenants, conducting door-to-door surveys to determine interest in establishing a tenant organization, and to offer information about the tenant organization;
3. Offering assistance for tenants to participate in tenant organization activities; and
4. Convening tenant organization meetings on-site in a manner that is fully independent of management representatives. Management representatives may not attend such meetings unless invited by the tenant organization.

 

Tenants also have the right to be notified of and to formulate responses to:

1. Owner’s requests for budget-based rent adjustments;
2. Partial payment of claims;
3. Conversion from project paid utilities to tenant-paid utilities;
4. A reduction in tenant utility allowances;
5. Conversion of units to non-residential use, cooperative housing, or condominiums;
6. Major capital additions; and
7. Loan prepayments.

 

Meeting Space

 

Owners and management agents must reasonably make available the use of any community room or other available space appropriate for meetings when requested by tenants or the tenant organization for activities related to the operation or establishment of the tenant organization, or to address issues relating to their living environment collectively. All programs or activities must be held in accessible locations unless the owner can demonstrate that doing so would result in a fundamental alteration of the program or an undue financial and administrative burden (i.e., would not be a reasonable accommodation).

 

Unless the project has low-income housing tax credits, an owner may charge a reasonable fee, approved by HUD and placed in the project account.

 

Tenant Organizers

 

A “tenant organizer” is a tenant or non-tenant who assists other tenants in establishing and operating a tenant organization, and who is not an employee or representative of current or prospective owners, managers, or their agents. Owners and management agents must allow tenant organizers to assist tenants in establishing and operating tenant organizations.

 

I recommend that a non-tenant “tenant organizer” be accompanied by a tenant while on the property. However, in order to require this, the owner must have a written policy against canvassing, and the policy must be consistently enforced. If the owner does not have a policy prohibiting canvassing, non-tenant organizers must be allowed to access the property without being accompanied by a tenant.

 

Impediments to Residents or Resident Associations Attempting to Exercise Their Rights

 

Owners may take no action that will impede the ability of tenants to establish a tenant organization or interfere with the activities of such organizations once they are organized. Examples of prohibited impediments include the following:

• Unreasonable denial of accessible meeting space;
• Repeatedly sending management representatives to resident meetings when management has requested that management not attend;
• Evicting, threatening to evict, withholding entitlements, or otherwise penalizing residents for organizing or asserting their rights;
• Attempting to form a competing resident organization under control of the management company or owner; and
• Running for office or otherwise serving as a member of the resident organization.

 

HUD Enforcement Options

 

A violation of the requirements outlined in the notice by an owner or management agent may result in one or more of the following sanctions:

• Debarment;
• Suspension;
• Limited Denial of Participation – this type of action excludes a party from further participation in a certain HUD program area. The action may be limited to a certain geographic area, and normally expires in one year;
• Civil Money Penalties – fines may be imposed on owners, principals of owners, and management agents who knowingly and materially fail to comply with the provisions of this notice. The maximum civil penalty for each offense is currently $42,500.