Opinion ID: 1963825
Heading Depth: 1
Heading Rank: 3

Heading: does application of the 25% of income in turnkey iii violate hud regulations?

Text: Likewise, the 22.5% income requirement is not in contravention of any of the HUD regulations governing the operation of Turnkey III, nor are those regulations themselves in violation of any statute or the Constitution. The court recognizes, as petitioner claims, citing §§ 1270.104(b) (1) and (2) and 1270.104(f) (2), that the regulations contain a preference for low-income people. However, recognition of that preference does not necessitate declaring the 22.5% income requirement invalid. Section 1270.104(b)(1) of HUD's regulations reads as follows: (b) Eligibility and standards for admission. (1) Homebuyers shall be low-income families as determined in accordance with the income definitions and limits established by the LHA and approved by HUD. The HUD-approved standards for admission to low-rent housing, including the LHA's established priorities and preferences and the requirements for administration of low-rent housing under . . . 42 U.S.C. 2000(d), shall be applicable except that the procedures used for homebuyer selection under Turnkey III shall be those set forth in this section. In carrying out these procedures the aim shall be to provide for equal housing opportunity in such a way as to prevent segregation or other discrimination on the basis of race, creed, color or national origin, in accordance with the Civil Rights Act of 1964. (Citations omitted). What this language means is that home buyers must be picked from within the broad class of people who are considered low-income in accordance with limits established by the LHA and approved by HUD. A home buyer has to be from that class of persons whose income ranges from the lowest that one can have and be entitled to participate in a conventional public housing project to those who have the maximum income that one can have and be able to participate in a public housing project. As long as the home buyer is among this class of people, he is within HUD approved standards for admission, and HUD standards, priorities and preferences are applicable to this extent. However, § 1270.104(b) (1) also says that the actual procedures used for selecting a home buyer shall be those set forth in the section. Subsection (b) (2) allows the local housing authority to establish income limits for Turnkey III which are different from conventional programs, provided they are in accord with applicable statutory and administrative requirements and approved by HUD. [19] Therefore, the income limits set for Turnkey III are valid as long as the eventual home buyer is from the class just discussed. Petitioner also relies on § 1270.104(f) (2) of the regulations in her argument regarding a preference for low-income people. That section provides that if there is an applicant who has potential for homeownership but his required monthly payment would be less than the break-even amount, he may be selected as a home buyer as long as the income of all selected home buyers is at least 10% more than the break-even amount for the project. [20] Although this particular section of the regulations allows the local housing authority to select particular home buyers whose monthly payments do not meet the break-even point for their particular unit, to do this HUD must balance any deficiencies by selecting as home buyers those whose monthly payment for their particular unit is in excess of the break-even point. Just because the local housing authority does not do this in a particular case, or any case, does not mean they are ignoring a preference for low-income families because in any event, it is only low-income families who are accepted into the program. The overriding consideration of this section of the regulations, and indeed the whole Turnkey III program, is that the financial solvency of the project must be maintained. This brings us to the question of whether or not NCHA's desire to maintain the financial solvency of Turnkey III justifies the establishment of a minimum income limit. This court is aware of public housing cases in which other courts, including one in this jurisdiction, have either said outright or indicated that trying to maintain the financial solvency of a particular housing project did not justify such things as rent ranges and minimum income requirements. [21] However, this court does not feel that these cases are dispositive of the issue here. One glaring difference makes it impossible to apply the same reasoning. Other courts were dealing with situations where the litigants were entitled to public housing by statute. [22] Here, however, as we previously indicated, there is no entitlement, statutory or otherwise, to homeownership. Having a minimum income requirement for acceptance into the Turnkey III program is not only reasonable in light of its concern with financial solvency, but it does not exclude anyone from obtaining a right to which an individual is legally entitled. Petitioner argues that the admission procedures of Turnkey III violate the regulations of HUD because they automatically deny admission to a particular class. This is erroneous. Section 1270.104(f)(1) of the regulations, which petitioner relies on to support this argument, is taken out of context. It reads as follows: (f) Selection of Homebuyers. Homebuyers shall be selected from those families determined to have potential for homeownership. Such selection shall be made in sequence from the waiting list established in accordance with this section, provided that the following shall be assured: (1) Selection procedures that do not automatically deny admission to a particular class; that ensure selection on a non-discriminatory and non-segregated basis. . . . Petitioner reads this section to mean that NCHA cannot automatically deny admission to any particular class, including that class of people whose income multiplied by 22.5% is not sufficient to meet the minimum monthly payment. That is not what the section says. It says that home buyers are to be those who have been determined to have potential for homeownership. That means that home buyers shall be selected from those families who meet all of the standards set out in § 1270.104(e)(2) relating to potential homeowners. The pertinent part of that section relating to monthly payments is as follows: (2) Potential for Homeownership. In order to be considered for selection, a family must be determined to meet at least all of the following standards of potential for homeownership: (i) Income sufficient to result in a required monthly payment which is not less than the sum of the amounts necessary to pay the EHPA, the NRMR, and the estimated average monthly cost of utilities attributable to the home. . . . Reading the two sections in conjunction with one another, we see that NCHA cannot deny selection to a particular class when selecting those who are to become home buyers from those who have already been determined to have homeownership potential. Section 1270.104(f)(2) does not, however, prohibit excluding for lack of homeownership potential that class of people whose income is not sufficient to meet the minimum requirement. In order for petitioner to rely on Section 1270.104(f) (2) for the proposition that NCHA is automatically denying admission to her because she belongs to a particular class, she would have had to first qualify under Section 1270.104(e) (2) as having been one of those persons said to have homeownership potential. Since she does not, the argument that the admission procedures discriminate against the particular class she belongs to has no merit. This section must also be read in conjunction with Section 1270.104(b) (1) and (2). Doing so leads to the conclusion that the concern evidenced by the language regarding discriminating against a class was in regard to discrimination on the basis of race, creed, color or national origin. [23] Consequently, the court finds as a matter of law that NCHA's 22.5% minimum income requirement is valid and does not violate the HUD regulations.