Source: http://aff-hous.blogspot.com/2014/10/why-is-electrical-submetering.html
Timestamp: 2019-04-18 15:35:28+00:00

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Save Affordable Housing: Why is electrical submetering "additional rent"?
The plaintiffs are tenants in the Riverview, which used to be a Mitchell-Lama development. When it left the M-L program, tenants got federal Section 8 enhanced vouchers and new leases from the NYS HCR. Unfortunately, those leases describe "electrical submetering bills" as "additional rent." So instead of cutting off people's electricity if they can't pay the rent, landlords are allowed to try to evict them. Thus a bunch of tenants falling behind in their electric bills found themselves in court for eviction.
The tenant said that HCR's standard lease clause about "additional rent" is not legal under HUD regulations. HUD declined to determine that. But all tenants should fight to ensure that submetering NOT be "additional rent".
The case clearly explains "decoupling" and submetering bills and is worth reading. However, the tenants lost on procedural grounds: the court said mainly that HUD didn't have to determine whether the NYS Homes & Community Renewal lease was OK under HUD rules, and that the federal court shouldn't get involved where a Yonkers court had already ruled against the tenants or they had settled with the landlord.
EXCERPTS of the decision are below. If you would like to read the full decision, please contact Sue [ at ] janak [d o t] org.
Before the Court are the Motions to Dismiss of Defendants United States Department of Housing and Urban Development ("HUD") and its Secretary, Shaun Donovan, (collectively, "HUD"), and Darryl C. Towns, Commissioner of the New York State Division of Housing and Community Renewal ("HCR"), (Docs. 33, 35).1 For the reasons set forth below, the Motions to Dismiss are GRANTED.
For purposes of the instant Motions to Dismiss, I accept as true the facts, but not the conclusions, as set forth in the SAC.
Section 236 of the National Housing Act of 1934 provides that the "Secretary [of HUD] is authorized to make…periodic interest reduction payments on behalf of the owner of a rental housing project designed for occupancy by lower income families." 12 U.S.C. §1715z-1(a).
Under Section 236, HUD may continue to make these interest reduction payments for a mortgage that has been refinanced if the owner "enters into such binding commitments as the Secretary may require…to ensure that the owner will continue to operate the project in accordance with all low-income affordability restrictions." Id. §1715z-1(e)(2).
This process — whereby the interest reduction payments are separated from the original mortgage — is known as "decoupling." (SAC ¶77.) The Secretary of HUD is further authorized to enter into contracts with local or state entities, such as HCR, to "monitor and supervis[e]…the management" of these Section 236 arrangements. See 12 U.S.C. §1715z-1(p).
administers the Section 8 program in a particular geographic area. See id. The eligible family uses the voucher to rent a dwelling unit from a landlord that is willing to participate in the Section 8 program. See id. The PHA has a Housing Assistance Payment ("HAP") contract with the landlord on behalf of the family. Id. §1437f(c), (o)(7). The eligible family in turn pays a portion of its income as rent directly to the landlord. HUD provides funding to the PHA for its HAP contract payments to the landlord. Id. §1437f(b).
Submetering is designed to save energy. (Id. Ex. E, at 5.) The tenant's allowance is calculated based on typical utility costs of energy conservative households in the locality. See 24 C.F.R. §982.517. "If a tenant's utility bill exceeds the allowance, the tenant must make up the difference; if the allowance exceeds the bill, the difference may be pocketed." McDowell v. Phila. Hous. Auth., 423 F.3d 233, 236 (3rd Cir. 2005).
Landlord initiated eviction proceedings against the other Plaintiffs as well, (id. ¶¶177, 205, 230, 248, 272, 294), although these Plaintiffs — rather than proceeding through motion practice — directly entered into stipulations of settlement whereby they agreed, among other things, to pay future utility charges as additional rent, (id. ¶¶178, 206, 231, 273, 295; see Berg Decl. Exs. 19, 20).
Plaintiffs' final claim for relief against HUD is that it has failed to investigate whether submetering at Riverview has resulted in tenant displacement, and in doing so, "breached its statutory and regulatory duty to ensure that a Section 236 Decoupling does not result in tenant displacement under 12 U.S.C. §4112(a)(2)(C) and 24 C.F.R. §248.141." (SAC ¶¶323-24.) But as HUD points out, (see HUD's Mem. 21), Sections 4112 and 248.141 do not provide a basis for APA review of HUD's alleged failure to act on Plaintiffs' complaints that tenants are being displaced at Riverview. Rather, these Sections simply provide direction as to when HUD "may approve a plan of action" for the extension or termination of "low-income affordability restrictions on any eligible low-income housing." See 12 U.S.C. §4112(a) (criteria for approval of a plan of action for extension of restrictions); 24 C.F.R. §248.141 (criteria for approval of a plan involving termination of restrictions). They mandate no post-approval monitoring in the Section 236 context.
Plaintiffs' reliance on a February 16, 2010 letter from HUD, (SAC Ex. D), in which HUD stated that it would continue to monitor the developments and potential tenant displacement at Riverview after the decoupling process was complete, is misplaced. (See Ps' Opp. 47.) That letter did not obligate HUD to take any discrete action or constitute a forfeiture of its discretion to investigate or not, as it sees fit. . . . . Moreover, that a court may choose to accord some deference to a well-reasoned informal agency opinion hardly means that other sorts of informal statements of an agency are somehow transformed into legally enforceable mandates. A document such as the HUD letter here cannot fairly be read to create a legal obligation that may be enforced via the APA. Indeed, were this Court to interpret it as such, it would discourage agencies from engaging in informal communication with interested parties.
First, the federal-court plaintiff must have lost in state court. Second, the plaintiff must complain of injuries caused by a state-court judgment. Third, the plaintiff must invite district court review and rejection of that judgment. Fourth, the state-court judgment must have been rendered before the district court proceedings commenced.
For the reasons stated above, the Motions to Dismiss are GRANTED. The Second Amended Complaint is DISMISSED for lack of subject matter jurisdiction. The Clerk of Court is respectfully directed to terminate the pending Motions, (Docs. 33, 35), and close the case.
I write as someone familiar with the details and advantages of sub-metering in reducing the conventional (non-heat) costs of electricity --when handled properly--in large urban apt. buildings. Sub-metering, handled properly, can in many instances reduce electricity bills for all and save energy--it's original intent. This occurs via several mechanisms such as the advantages of bulk buying via an intermediate provider, efficient installaton and administration, new accurate metering and the ability ot help tenants/residents via low cost instruments to monitor thier own usage.
THAT SAID: obviously energy savings and a reduction in costs for tenants/residents does NOT occur when LL's deliberately provide heat via sub-metered electricity--and bundle the cost of heat from electricity into overall "normal" electricity usage --and that on top of "rent". In this case, it seems obvious that LL's are deliberately subverting the legal obligation to provide heat to tenants as part of historically normal lease provisions: after all who wants to rent an apartment without heat--or even one heated by high cost electricity?
The probable sub-agenda of LL's who mis use what started out as a way to reduce fossil fuel use to generate electricity seems obvious: raise rental costs on order to evict tenants caught up in a web of high electricity costs on top of rent--evict and then also raise the base "rent" of the next round of hapless occupants: increasing overall costs t tenants.
Unhappily, HUD and now an unwitting Court--have bought into LL chicanery--by deeming the variable costs of electricity for heat and lights and appliances can be bundled and billed as an additional legal charge for "rent" on top of normal services provided by a lease.
I note that other "political" issues also pop out: 1/ What happened the original intent of NYS/ NYSERDA in encouraging sub-metering as a way of controlling both cost of electricity and making its use MORE efficient--on large part by permitting bulk buying and helping tenants to monitor their usage and costs via cost devises within apts?
2/ In no instances that this writer can recall, was the system popularized by NYS/NYSERDA in order to give LL's additional rent disguised as the cost of electricity--whether for normal electricity usage or that PLUS heat. To the contrary sub-metering was touted as part of good enery policy. 3/ Nor were States or Housing Depts. consulted when an ignorant? uninformed? bureaucrat at HUD --let alone someone who prized LL's over tenants--undermined/redefined conventional obligations of a rental lease to allow additional charges for electric heat--tho I add: NOT for heat provided by conventional gas or oil systems.
The pro-LL Court "decision" needs to be appealed up the hierarchy of Courts until it is overturned. Cities with large numbers of rental housing as well as subsidized housing developments need to do some homework--and make it illegal for any LL to switch to electric heat--whether or not sub-metered--in order to generate increased revenue from tenants--as well as churn tenant turnover.

References: §1715
 §1715
 §1715
 §1437
 §1437
 §982
 v. 
 §4112
 §248
 §4112
 §248