874 F.3d 98 (3rd Cir. 2017), 16-2692, Hayes v. Harvey

Docket Nº:16-2692
Citation:874 F.3d 98
Opinion Judge:FISHER, Circuit Judge.
Party Name:THEODORE HAYES; AQEELA FOGLE, Appellants v. PHILIP E. HARVEY
Attorney:Michael Donahue, Esq., Rachel Garland, Esq. [ARGUED], George D. Gould, Esq., Community Legal Services, Philadelphia, PA, Counsel for Appellants. Susanna Randazzo, Esq. [ARGUED], Kolber & Randazzo, Philadelphia, PA, Counsel for Appellee. James R. Grow, Esq., National Housing Law Project, San Franc...
Judge Panel:Before: FISHER,[*] HARDIMAN, and GREENAWAY, JR., Circuit Judges. GREENAWAY, JR., dissenting. GREENAWAY, JR., dissenting.
Case Date:October 18, 2017
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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874 F.3d 98 (3rd Cir. 2017)

THEODORE HAYES; AQEELA FOGLE, Appellants

v.

PHILIP E. HARVEY

No. 16-2692

United States Court of Appeals, Third Circuit

October 18, 2017

Argued January 18, 2017.

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On Appeal from the United States District Court for the Eastern District of Pennsylvania. (E.D. Pa. No. 2-15-cv-02617). District Judge: Honorable Nitza I. Quiñones Alejandro.

Hayes v. Harvey, 186 F.Supp.3d 427, (E.D. Pa., May 10, 2016)

Michael Donahue, Esq., Rachel Garland, Esq. [ARGUED], George D. Gould, Esq., Community Legal Services, Philadelphia, PA, Counsel for Appellants.

Susanna Randazzo, Esq. [ARGUED], Kolber & Randazzo, Philadelphia, PA, Counsel for Appellee.

James R. Grow, Esq., National Housing Law Project, San Francisco, CA, Counsel for Amicus Curiae.

Before: FISHER,[*] HARDIMAN, and GREENAWAY, JR., Circuit Judges. GREENAWAY, JR., dissenting.

OPINION

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FISHER, Circuit Judge.

In this appeal, we must decide whether the enhanced voucher provision of the United States Housing Act of 1937, 42 U.S.C. § 1437f(t), requires property owners to continuously renew enhanced-voucher tenancies. Theodore Hayes and Aqeela Fogle (the Hayes family) are a low-income family whose rent is subsidized by enhanced voucher assistance. Their eligibility to receive enhanced vouchers is contingent upon their continued tenancy in a unit currently owned by Philip E. Harvey. Toward the end of their most recent lease term, Harvey notified the Hayes family that he would not renew their lease. The Hayes family refused to vacate the premises, arguing that as enhanced-voucher tenants, they have an enforceable " right to remain" in their unit as long as it is offered for rental housing. The District Court disagreed and granted Harvey's motion for summary judgment. Because we conclude that the enhanced voucher provision does not obligate property owners to renew enhanced-voucher tenancies after the initial lease term, we will affirm.

I. Background

A. Statutory Background

Since 1974, the federal government has provided rental assistance to low-income families through section 8 of the Housing Act, 42 U.S.C. § 1437f. Congress enacted section 8 with the express purpose of " aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing." § 1437f(a). " [A] key means to that end is the creation of incentives for private owners to participate in the section 8 program." Barrientos v. 1801-1825 Morton LLC, 583 F.3d 1197, 1203 (9th Cir. 2009).

Section 8 assistance is funded by the U.S. Department of Housing and Urban Development (HUD) and administered by local public housing agencies. 24 C.F.R. § 982.1(b)(1). Those agencies enter into Housing Assistance Payment (HAP) contracts with participating property owners. HAP contracts generally require that a lease between a property owner and tenant cover at least one year. 42 U.S.C. § 1437f(d)(1)(B)(i), (o)(7)(A). They also prohibit the property owner from " terminat[ing] the tenancy [during the term of the lease] except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause." § 1437f(d)(1)(B)(ii), (o)(7)(C). Importantly, HAP contracts establish the maximum monthly rent a property owner may charge for each dwelling unit. § 1437f(c)(1)(A). A tenant's assistance is statutorily determined based on his or her household income, the unit's rent, and the rent for similar units in the market area (known as the payment standard). § 1437f(c)(3), (o)(2).

There are two distinct assistance programs: project-based assistance and tenant-based assistance (or the Housing Choice Voucher program). Project-based assistance is provided directly to property owners--the subsidies are property-specific.

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Tenant-based assistance is provided directly to tenants--the subsidies are tenant-specific.

In the 1990s property owners became eligible to opt out of project-based assistance programs. Congress and HUD sought to minimize tenant displacement, while also continuing to encourage property owner participation in section 8 programs. See Barrientos, 583 F.3d at 1203-05. So Congress enacted a notice requirement that prohibits a property owner from increasing rent or evicting tenants until he or she provides one year of written notice to HUD and the residing tenants that the HAP contract for project-based assistance will not be renewed. See § 1437f(c)(8). And the notice must inform tenants that " in the event of termination [HUD] will provide tenant-based rental assistance to all eligible residents, enabling them to choose the place they wish to rent, which is likely to include the dwelling unit in which they currently reside." § 1437f(c)(8)(A).

But an ordinary voucher under tenant-based assistance does not cover a tenant's rent to the extent that it exceeds the applicable payment standard. § 1437f(o)(2)(B). And following a valid opt-out, property owners are no longer subject to limitations on what they may charge for rent. So to enable residents to " choose" to continue renting the " dwelling unit in which they currently reside," § 1437f(c)(8)(A), Congress also enacted a new type of tenant-based assistance: enhanced voucher assistance, § 1437f(t).

Although it is a type of tenant-based assistance, enhanced voucher assistance has elements of both project-based and tenant-based assistance. Like tenant-based assistance, enhanced voucher assistance is tenant-specific and participating tenants are required to contribute a statutorily determined portion of their income. Compare § 1437f(o)(2) (ordinary voucher assistance), with § 1437f(t)(1) (enhanced voucher assistance). Like project-based assistance, enhanced voucher assistance is property-specific. § 1437f(t)(1)(B). Tenants are eligible to receive enhanced voucher assistance during any period in which they remain in the property they resided in on the date of the property owner's opt-out from a project-based program (the " eligibility event" ). § 1437f(t)(2). Should the tenant move or make the voucher available to another family, his or her assistance converts to ordinary tenant-based assistance. § 1437f(t)(1)(C).

The primary " enhancement" of the assistance is that an enhanced voucher covers the difference between the tenant's contribution and the rent, even if the rent exceeds 110 percent of the fair market rent for similar units in the area. See § 1437f(t)(1)(B). In other words, enhanced voucher assistance is not limited by a payment standard.

B. Factual Background

In 1982, Florence Hayes and her family moved into 538B Pine Street, Philadelphia, Pennsylvania--a four-bedroom unit in a duplex owned by Pine Street Associates. Pine Street Associates entered into a HAP contract with the Philadelphia Housing Authority (PHA), which provided rental assistance under a project-based program for its tenants, including the Hayes family.

On January 9, 2008, Pine Street Associates notified HUD and the Hayes family that when its HAP contract expired on January 17, 2009, it would not be renewed. Accordingly, on January 17, 2009, the Hayes family's assistance converted from project-based to tenant-based. The Hayes family elected to remain and chose to do so with enhanced voucher assistance.

Later that year, Pine Street Associates sold 538 Pine Street free and clear of any

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impediments, encumbrances, liens, or restrictions, to Philip E. Harvey. Harvey entered into a HAP contract with the PHA and a related lease with the Hayes family, agreeing to accept enhanced vouchers toward their rental obligations. The HAP contract set the maximum rent for the unit at $2,400 per month, exceeding the applicable payment standard of $1,546 per month by $854. While under the ordinary voucher provision the Hayes family would have to cover the rent to the extent that it exceeded $1,546, because they were eligible for enhanced voucher assistance, the PHA covered the $854 difference. The lease had an initial termination date of April 30, 2011, subject to automatic renewal for another one-year term.

In February 2015, Florence Hayes passed away and Theodore Hayes (Florence Hayes's son) was processed as head of household. Soon after, Harvey notified the PHA and Theodore Hayes that he would not renew the HAP contract or the Hayes family's lease upon the natural expiration of the lease term, citing Florence Hayes's passing and his desire to renovate and have his daughter live in the unit. And on May 1, 2015, when that lease term expired, Harvey sent a notice to vacate.

C. Procedural History

The Hayes family responded to the notice to vacate by filing a complaint in the District Court seeking declaratory...

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