U.S. Department of Housing and Urban Development

Office of Public and Indian Housing

Special Attention: Notice PIH 96-23 (HA)

Directors, Offices of Public Housing;

Administrators, Offices of Native Issued: May 1, 1996

American Programs; Section 8 Public Expires: September 30, 1996

Housing Agencies and Indian Housing

Authorities

Cross References:

Subject: Omnibus Consolidated Rescissions and Appropriations Act of 1996

Statutory Changes Affecting the Administration of the Section 8

Certificate, Voucher, and Moderate Rehabilitation Programs

1\. Purpose and Applicability of Notice PIH 96-7 (HA) : This notice
provides

implementing guidance for three statutory changes to the Section 8

certificate, voucher, and moderate rehabilitation programs resulting
from

the Omnibus Consolidated Rescissions and Appropriations Act of 1996,

P.L. 104-134, 110 Stat. 1321, approved April 26, 1996.

Please note that the FY 1996 Appropriations Act does not modify or
negate the

January 26, 1996 Continuing Resolution provisions concerning the
mandatory

delay in reissuing turnover certificates and vouchers, optional
suspension of

the federal preferences, and FY 1996 administrative fees. Notice PIH
96-7

(HA) issued on February 13, 1996 is still applicable for these three
areas.

The FY 1996 Appropriations Act does, however, modify the January 26,
1996

Continuing Resolution provisions concerning mandatory minimum rents.

Specifically, the FY 1996 Appropriations Act provides that HUD or an HA
may

waive the minimum rent requirement to provide for a transitional period
up to

three months for any family. Additional information on this subject will
De

provided in a subsequent HUD notice.

PPLI: Distribution: W-3-1, R-3-1(PIH), R-6, R-7, R-9, 138-7, 138-3

2\. Summary of the Omnibus Consolidated Rescissions and Appropriations
Act of

1996 Statutory Changes Affecting the Section 8 Certificate, Voucher, and

Moderate Rehabilitation Programs:

\(A\) \"TAKE-ONE, TAKE-ALL\" SUSPENSION

\(1\) Description: Section 203(a) of the Appropriations Act suspends
Section

8(t) of the U.S. Housing Act of 1937 for federal FY 1996. Section 8(t)

required that an owner who entered into a Section 8 housing assistance

payments contract on behalf of any tenant in a multifamily housing

project could not refuse to lease certain units in all multifamily

projects of the owner, if the proximate cause of the refusal was that

the family was a certificate or voucher holder.

\(2\) Result: The Section 8(t) \"take-one, take-all\" statutory
provision is

suspended for federal FY 1996 (October 1, 1995 through September 30,

1996).

\(3\) HA Action: The HA should review HA outreach to owners and HA

informational packets for owners to ensure any statements about the

Section 8(t) \"take-one, take-all\" requirement are revised to reflect
the

suspension of Section 8(t) for FY 1996. The HA should make a concerted

effort to inform the prospective owner community of this change,

particularly in marketing the programs to owners with units in low-

poverty areas.

\(B\) \"ENDLESS LEASE\" ELIMINATION

\(1\) Description: Section 203(c) of the Appropriations Act amends
Sections

8(d)(1)(B)(ii) and (iii) of the U.S. Housing Act of 1937 for federal FY

1996\. Section 8(d)(1)(B)(ii) provides that the owner may not terminate

a Section 8 tenancy except for serious or repeated lease violations, for

violation of applicable Federal, State, or local law, or for other good

cause. Section 8(d)(1)(B)(iii) provides that certain criminal activity

is grounds for the tenancy termination. The Appropriations Act amends

the law to confirm that the above cited statutory requirements for

termination of tenancy only apply to a termination that occurs \"during

the term of the lease.\"

\(2\) Result for the tenant-based certificate and voucher program: This

amendment eliminates the \"endless lease\" disincentive to owner

participation. In accordance with the law, current and future tenant-

based leases may be terminated without cause at the end of the initial

term and at the end of any term extension.

2

Section 982.309 of the conforming rule (effective October 2, 1995) for

the tenant-based certificate and voucher programs provides that the

initial term of the lease must be for at least one year and the lease

must provide for automatic renewal after the initial term of the lease.

The lease may provide either for automatic renewal for successive

definite terms (e.g., month-to-month or year-to-year) or for an

automatic indefinite extension of the lease term. The conforming rule

also provides that the statutory grounds for termination of tenancy

apply to a termination of tenancy \"during the term of the lease\"

(§982.310(a)). Consistent with the legislative direction contained in

the Appropriations Act, HUD is eliminating the \"endless lease for all

tenant-based certificate and voucher units. The conforming rule

provides the regulatory authority for this action.

Except as required by State or local law, an owner participating in the

tenant-based programs may terminate tenancy without cause at the end of

the initial lease term or at the end of a successive definite term. For

instance, if the lease provides for automatic renewal on a month-to-

month basis, the owner may terminate tenancy without cause at the end of

each month. During the course of each month, however, the owner may

only terminate the tenancy if the owner has cause under the grounds for

termination of tenancy stated in the lease addendum.

If the owner\'s lease provides for an automatic indefinite extension of

the lease after the initial term (e.g, does not provide for a month-to-

month or year-to-year extension), the owner may only terminate the

tenancy after the initial term for cause. If an owner with a lease with

a successive indefinite term wants to switch to a lease for successive

definite terms, the owner may offer the family a new or revised lease in

accordance with §982.309(e) The tenant\'s refusal to accept the new or

revised lease may be other good cause for eviction.

Result for the project-based certificate (PBC) and moderate

rehabilitation programs: There are no plans to revise the regulatory

termination of tenancy provisions for the PBC and moderate

rehabilitation programs.

\(3\) HA Action: HAs are required to use the revised tenant-based
certificate

and voucher lease addenda (dated March 1996) attached to this notice for

leases executed after receipt of this notice. Section 9.a of the old

rental certificate lease addendum and Section 10.a of the old rental

voucher lease addendum were revised to clarify that the required owner

grounds for termination of tenancy only refer to terminations that occur

during the term of the lease.

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HAs should advise owners currently participating in the tenant-based

certificate and voucher programs that the \"endless lease\" requirement

has been eliminated and, unless prohibited by State or local law, owners

may terminate tenancy without cause at the end of the initial lease term

or at the end of a successive definite term as provided by the lease

(e.g., year-to-year or month-to-month). It is noted that elimination of

the \"endless lease\" is not dependent on execution of the attached
lease

addenda.

The HA should review HA owner outreach efforts and HA owner

informational packets to ensure any materials pertaining to the
\"endless

lease\" are eliminated.

\(C\) SUSPENSION OF OWNER TERMINATION NOTICES TO HUD

\(1\) Description: Section 203(b) of the Appropriations Act amends
Section

8(c) (9) of the 1937 U.S. Housing Act so that the provisions do not

apply to HAP contracts under the certificate and voucher program for

federal FY 1996.

In order to comply with the law, an owner was required to provide

written notice to the HUD field office and the family not less than 90

calendar days before the termination of a tenant-based HAP contract (or

one year before termination of a project-based HAP contract) because of

an opt-out or expiration. (Program regulations also required that a

copy of this notice be provided to the HA.)

\(2\) Result: For federal FY 1996 (October 1, 1995 through September 30,

1996), Sections 8(c) (9) and (10) do not apply to the tenant-based

certificate and voucher programs or the PBC program. Owners

participating in these three programs are not required to provide the

statutory 90 day or one year written termination notice to HUD, the

family, and the HA before terminating tenancy for a business or economic

reason or because the HAP contract has expired.

Section 982.455(b) of the certificate and voucher regulations explicitly

implements the notice requirements of Sections 8(c) (9) and (10). By

virtue of the Appropriations Act, these notice requirements are not

applicable in federal FY 96. Therefore, the regulations at \$982.455(b)

are not applicable for federal FY 96. In the certificate and voucher

lease addenda attached to this notice, Section 10.c of the old rental

certificate lease addendum and Section 11.c of the old rental voucher

lease addendum were deleted.

4

Suspension of these statutory owner termination notice requirements for

the certificate and voucher programs do not affect other termination

notices required by the lease or State or local law.

The statutory one year owner termination notice requirement still

applies to owners participating in the moderate rehabilitation program.

\(3\) HA Action: HAs are required to use the revised tenant-based
certificate

and voucher lease addenda (dated March 1996) attached to this notice for

leases executed after receipt of this notice.

HAs should ensure that potential owners concerned about the subject 90

day and one year owner termination notices are made aware that the

requirement has been suspended. The HA should review HA owner outreach

efforts and HA owner informational packets to ensure any materials

pertaining to the statutory owner termination notice are revised to

reflect the suspension of this requirement for federal FY 1996.

HAs should also advise participating owners in the certificate and

voucher programs that they are not required to give the subject 90 day

and one year owner termination notices to HUD, the family, and the HA

for the remainder of federal FY 1996 (through September 30, 1996) to

terminate tenancy for a business or economic reason. The suspension of

the statutory termination notice applies to all participating owners,

regardless of whether a new lease with the revised lease addendum

attached to this notice is executed.

HAs advising owners regarding the owner notice termination suspension

should emphasize that it is only applicable for terminations that occur

in federal FY 1996. Therefore, if an owner participating in the tenant-

based programs anticipates terminating a tenancy within the first 90

days of FY 1997 (between October 1 and December 31, 1996) for a reason

that would trigger the statutory owner termination notice, the owner

should decide whether it is advisable to provide the 90 day notice

during federal FY 1996, notwithstanding the suspension of the owner

notice requirement during federal FY 1996. PBC owners should be advised

of the similar complication regarding the timing of the one year owner

termination notice.

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3\. Authorizing Legislative Changes: The Omnibus Consolidated
Rescissions

and Appropriations Act of 1996 provisions discussed in this notice also
are

being considered by the authorizing committees in both houses of
Congress.

Therefore, it is likely that some or all of the temporary statutory
changes

will be made permanent when new housing legislation is enacted.

Kevin Emanuel Marchman, Deputy Assistant

Secretary for Distressed and Troubled

Housing Recovery

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ATTACHMENTS CONTAIN FORM HUD-52535.3, LEASE ADDENDUM - BASIC VERSION -

SECTION 8 TENANT-BASED ASSISTANCE RENTAL CERTIFICATE PROGRAM AND FORM
HUD-

52647.3, LEASE ADDENDUM - BASIC VERSION - SECTION 8 TENANT-BASED
ASSISTANCE

RENTAL VOUCHER PROGRAM.