Thousands of RD Residents Face Dramatic Rent Increase 

blogBy Gideon Anders

Large numbers of very low-income residents of Rural Development (RD) rental (Section 515) and Farm Labor (Section 514) housing who are receiving Rental Assistance (RA) subsidies are getting, or are about to get, 30-day notices of rent increases from their landlords. These notices substantially increase rents effective on September 1 or October 1 of this year, or shortly thereafter. It is estimated that as many as 20,000 households throughout the country will receive these notices, with sixty percent of them likely to be elderly households or households that include a person with a disability. These households cannot afford these increased rents and are likely to be displaced or evicted. The increases are the result of the arbitrary manner in which RD calculated the amount of RA that is awarded to each development, and they are illegal.

Owners are sending out rent increase notices because RD has advised the owners funding under their individual RA contracts has been exhausted and that the agency cannot renew the contracts during their 12-month term. This is not true. RD knowingly, if not intentionally, underfunded RA contracts starting late last year by adopting an arbitrary methodology for determining the amount of assistance granted to each owner based on a state-wide three-year average of the cost of subsidizing a unit with RA. In many instances this amount was adequate. But in others, the methodology underfunded contracts that have legitimate and RD-approved higher operating costs. These are the contracts that have now exhausted their RA funding.

RD claims that it cannot do anything to deal with the issue because Congress, at RD’s request, adopted legislation in 2014 that precludes the agency from renewing any RA contract during the term of that contract. While this is true, Congress did not direct RD to underfund contracts, which is the real cause of the problem. Moreover, RD never advised owners or residents that they could appeal the amount of RA awarded to each development under these contracts. By failing to do this, RD violated the owners’ and residents’ due process rights.

The rent increases are also illegal. Section 1490a(a)(3)(C) of the Housing Act of 1949 precludes owners of Section 515 or 514 housing from increasing the rent of any resident by more than 10 percent during any 12-month period. The rent increases that are being implemented exceed this amount, and RD has been unwilling to advise owners that their rent increases are illegal. RD has been informing owners in writing that they can lessen the impact of the loss of RA by stopping to make mortgage and reserve payments and by dipping into reserve accounts. They are, however, also advising the owners orally that they can raise residents’ rents, something that is precluded by law.

These rent increases may also be illegal under the residents’ leases and should be challenged if they are.

Residents, who are affected by these rent increases and who cannot afford attorneys, should be urged to contact their local legal services programs for help. The National Housing Law Project is prepared to assist those programs in representing their clients. Also read, USDA Urged to Stop Advising Property Owners that They Can Increase Rents.
For assistance, contact Gideon Anders at ganders@nhlp.org.

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