Housing and Development Law Inst THE COUNSELLOR

VOLUME 4, ISSUE 1 HDLI: A Legal Resource to Public Agencies MARCH 31, 2006

Calendar of Events: CHARITABLE CONTRIBUTIONS TO PUBLIC HDLI’s 2006 Spring HOUSING AUTHORITIES CLE Conference May 4-5, 2006 Washington Marriott By Steven J. Riekes, Esq. Washington, D.C. HDLI board member and partner, Marks Clare & Richards, L.L.C., Omaha, NE

On occasion, a public housing is so classified. A State, a possession of the Inside this Issue: authority may receive an inquiry United States, or any politi- from a potential donor wanting to However, a public housing author- cal subdivision of any of the President’s Message 2 know if a charitable donation can ity is not a “501(c)(3)” organiza- foregoing, or the United be made to the authority. The tion. Many people assume that States or the District of A Letter from the inquisitive donor, who most likely they are, but, in fact, they are not. Columbia, but only if the Executive Director wishes to take a charitable That does not mean, however, contribution or gift is made & General Counsel 3 deduction from his or her taxes, that the donor may not be able to for exclusively public pur- or a private foundation con- take a charitable deduction in poses. Recent HUD Notices 9 cerned about the status of its making a gift to a housing potential beneficiaries, may in- authority. But, to achieve that § 170(c)(1). Case Corner 13 quire as to the authority’s status result, a somewhat different legal as a “501(c)(3)” organization. course must be followed. The The first issue is whether a public This reference is made to Section purpose of this paper is to explain housing authority can qualify as a THE COUNSELLOR is 501 of the Internal Revenue Code how that might be accomplished. “political subdivision.” This published by the Housing exempting “Corporations, and issue involves both federal law and Development Law any community chest, fund, or Section 170 of the Internal and state law. With few Institute (included in foundation, organized and oper- Revenue Code provides: exceptions, public housing au- membership dues), ated exclusively for religious, thorities are products of state charitable, scientific, testing for 170(a) Allowance of deduc law. For purposes of this 630 Eye Street, NW public safety, literary, or educa- tion. -- discussion, however, instead of Washington, D.C. 20001 tional purposes . . . .” The usual examining the public housing ph: (202) 289-3400 charitable donee, such as a (1) General rule. There shall authority statutes of all 50 fax: (202) 289-3401 church, school, museum, or the be allowed as a deduction states, I will refer to Nebraska e-mail: [email protected] like, is classified under this any charitable contribution law. I do so for a number of website: www.hdli.org section of the Code. Charitable (as defined in subsection (c)) reasons. First, Nebraska public Editor: donors are accustomed to this payment of which is made housing authority law was rewrit- Lisa Walker Scott, Esq. form of procedure, and if they within the taxable year. . . ten in light of the Model Housing want proof of the status of the Assistant Editor: donee, they usually ask for a In the definition section referred to Timothy P. Coyle copy of the donee’s letter from above, appears the following: the I.R.S. showing that the donee continued on page 4 PAGE 2 THE COUNSELLOR VOLUME 4, ISSUE 1

President’s Message

A NEW YEAR OF OPPORTUNITIES!

Dear Members: Forum luncheon. HDLI is working now to formulate a position paper to submit to HUD Going into the second year of my term as HDLI suggesting ways that HUD can provide better HDLI President President, 2006 promises to be a very guidance and workable regulations on issues Mattye Gouldsby Jones, Esq. challenging and equally rewarding year for our such as the Bond Amendment and eminent Dallas, TX organization. We have a major marketing effort domain, the Violence Against Women Act, Vice President underway, and we are trying more earnestly than procurement of legal counsel, and ways in which Mary McKenzie James ever to spread the good news about HDLI’s HUD can be more transparent to US - the housing Santa Cruz, CA unsurpassed networking, educational, and bar. In the third quarter of this year, we plan to Secretary-Treasurer advocacy services. No where else can the convene another General Counsel Forum to Barbara Huppee housing bar receive high level training and follow-up on the topics addressed in January and Lawrence, KS exposure to the myriad of legal issues that we to discuss and strategize on other pressing Board of Directors face on a daily basis. In reaching out to new issues that surface during the year. So, whether Vivian Bryant, Esq. Orlando, FL members, we not only want to focus on our or not you were able to make the January Forum, traditional market of housing agencies and their please plan to participate later this year. We Susan C. Cohen, Esq. Boston, MA lawyers, but we want to recruit other stakeholders would like to receive your input. We also urge you David C. Condon, Esq. in the industry who can both add another to alert colleagues in private corporate Owensboro, KY dimension to the discussions at our conferences organizations of the benefits of membership as Kurt Creager and also benefit by our unique services. These we expand member categories. We trust you will Vancouver, WA prospects would include landlords, managers, join the directors of the Board in communicating Ricardo L. Gilmore, Esq. Tampa, FL developers, financial institutions, and even this opportunity. We believe the housing industry will be enriched by the association. Cynthia D. Jones, Esq. individuals, working in the public and affordable Denver, CO housing industry. I hope that we can count on Carol A. Kubic, Esq. your help in promoting the value of membership in I am really looking forward to seeing you May 4- Minneapolis, MN HDLI to all of your colleagues, affiliates, 5, 2006 in Washington for HDLI’s annual Spring Thomas E. Lewis, Esq. contractors, financiers, and lawyers who do Conference entitled “Navigating The New World of Merced, CA business for your agency. If you know of any Affordable and Public Housing: Legal Strategies George K. Martin, Esq. Richmond, VA prospects in these areas, please take a minute to for Conquering New Financing, Management, and Margaret McFarland, Esq. send our staff an e-mail or note with their contact Operational Rules.” In her Executive Director’s Washington, D.C. information. Your active assistance will make all Letter, Lisa Walker Scott lays out the many C. Michael McInnish, Esq. the difference in ensuring that we can continue to important panel discussions that we are putting Montgomery, AL provide a high level of service for the housing bar. together surrounding this theme. With the Ricardo Elias Morales, Esq. timeliness of the issues and the incorporation of New York, NY I am so excited about HDLI’s newest member the panel of HUD officials, this will be one of our Saul N. Ramirez, Jr. Washington, D.C. service: the General Counsel Forum. Like HDLI’s best conferences yet! Michael H. Reardon, Esq. other conferences and trainings, we are looking Washington, D.C. for ways to provide additional forums for Many of the membership enjoy a collegial and Steven J. Riekes, Esq. thoughtful discussion and strategy, and the personal camaraderie with fellow HDLI members, Omaha, NE General Counsel Forum held January in Tampa thus the members of HDLI welcome your Executive Director & participation and ideas to bring you continued General Counsel was just that for PHA in-house general counsel and outside lawyers functioning in that capacity. excellent programming and member services. If Lisa Walker Scott, Esq. We were honored to have current and former HUD there is anything that the board or staff of HDLI Director of Administration General Counsel Keith Gottfried and Nelson Diaz can do to assist you, please do not hesitate to call participate and give key note addresses at the Timothy P. Coyle upon us. PAGE 3 THE COUNSELLOR VOLUME 4, ISSUE 1 A Letter from the Executive Director and General Counsel

challenges, and more. year. We will provide more details later this year. * HUD’s Proposed Extension of the Lisa Walker Scott, Esq. Property Management Fee Structure to the IN THIS ISSUE: I would like to highlight that Section 8 and Capital Fund Programs - the featured article in this issue was written HDLI’s SPRING CONFERENCE is MAY 4 AND 5, property management fees, front-line by long-time HDLI board member, Steven 2006! This year’s Spring Conference will be fees, strengths and weaknesses. Riekes of Marks Clare & Richards, L.L.C. in on of our best ones yet! Entitled Omaha, Nebraska. Many of you have “NAVIGATING THE NEW WORLD OF AFFORD- * The Effect of the “Violence Against interacted with Steve over the years at our ABLE AND PUBLIC HOUSING: Legal Women and Department of Justice conferences, during the drafting of HDLI/ Strategies for Conquering New Financing, Reauthorization Act of 2005” on Public NAHRO’s Model Public Housing Agency Management, and Operational Rules,” the Housing Evictions and Other Operations; statute, and other activities. Steve and I were conference will be held May 4 and 5, 2006 at tackling the issue of charitable contributions our usual locale, the Washington, D.C. * Project-Based Vouchering – Getting the to PHAs and tax-exemption issues, when we Marriott. Believe me, you really won’t want to Most Out of HUD’s Final Rule. decided that all of you would benefit by miss this conference. Given the depth of better understanding the issue. Steve information that we learned from HUD’s new * Emergency and Disaster Response: It’s agreed to write an excellent article for this General Counsel, Keith Gottfried, at our Not Just For The Gulf States– Getting issue of the Counsellor. Be sure to read General Counsel Forum in January, we Prepared and Legal Implications of Being Steve’s careful analysis so that you will be wanted our broader membership to benefit Caught Off Guard. able to thoughtfully respond to your client’s from his vision and learn of the latest questions about charitable contributions. If initiatives of his office. Mr. Gottfried has * Hot Legal Ethics Issues in 2006. you have a good idea for a feature article, graciously agreed to be our keynote already have written one, or are willing to luncheon speaker. We have even better GENERAL COUNSEL FORUM UPDATE! As write one on an interesting issue that you news! Mr. Gottfried is bringing along key HDLI President Mattye Jones described in encountered, please contact me. members of his staff and other HUD officials her message, HDLI offered a new service in to participate on a “Who’s Who at HUD” panel 2006: the General Counsel Forum. Please Finally, this issue describes a host of new PIH to kick off the conference. Come hear from plan to join us the third quarter of this year and other HUD notices, NOFAs, and Rules the key officials in HUD’s PIH, Section 8, as we convene another General Counsel that were published over the past several FHEO, IG and General Counsel’s offices that Forum to follow-up on the topics addressed weeks. Be sure to check them out. you always wanted to meet. in January and to discuss and strategize on other pressing issues that surface during the Continue to Soar! We have a host of important and timely legal topics to address this year, including:

* WHO’S WHO AT HUD? Hear From Key Officials in PIH, Section 8, IG, and the General Counsel’s Office.

* New Public Housing Operating Subsidy Rules and Asset Based Management – central v. front-line expenses, the transformability of FHA models, property grouping, “excess cash” and reserves, stop gaps, best practices, hopes and From Left to Right: Nelson Diaz, Mattye Gouldsby Jones, Lisa Walker Scott, and Keith Gottfried at HDLI’s General Counsel Forum in Tampa, FL on January 20, 2006 PAGE 4 THE COUNSELLOR VOLUME 4, ISSUE 1

CHARITABLE political subdivision thereof” is exempt from edged sovereign powers. 1 taxation. That regulation gives a little more MERTENS, LAW OF FEDERAL INCOME CONTRIBUTIONS TO definition to the term. The regulation TAXATION, § 8.09 at 27. As PUBLIC HOUSING provides, in part: discussed below, all of the cases addressing the meaning of the term AUTHORITIES The term ‘political subdivision,’ for ‘political subdivision’ under the Continued purposes of this section denotes any Internal Revenue Code have required division of any State or local the entity to possess at least one of governmental unit which is a the three generally recognized municipal corporation or which has sovereign powers in order to be Agency Act prepared by the Housing and been delegated the right to exercise classified as a ‘political subdivision.’ Development Law Institute and commis- part of a sovereign power of the unit. sioned by NAHRO in 1997. Second, on this As thus defined, a political subdivi- Supra, at p. 124. subject, Nebraska law is very typical of most sion of any State or local governmen- state public housing legislation. tal unit may or may not, for purposes The Fifth Circuit Court went on to state that it of this section, include special was not necessary that the political Pursuant to the Nebraska Housing Agency assessment districts so created, subdivision exercise all of the governmental Act, §§ 71-1572 to 71-15,168, a public such as road, water, sewer, gas, powers of the state: “‘[I]t is sufficient if it be housing agency is defined as a political light, reclamation, drainage, irriga- authorized to exercise a portion of them.’” subdivision of the State. Neb. Rev. Stat. § tion, levee, school, harbor, port Supra, at p. 125. 71-1575(16) provides in part: “ . . . A local improvement, and similar districts housing agency shall be a political and divisions of any such unit. The Court discussed the case of Commis- subdivision of this state. . . .” sioner of Internal Revenue v. Shamberg’s To understand what is meant by the phrase Estate, 144 F.2d 998 (2d Cir. 1944), cert. However, that does not completely answer “which has been delegated the right to denied 323 U.S. 792 (1945). In that case, the question. A housing authority must also exercise part of a sovereign power of the the New York Port Authority exercised be a “political subdivision” according to unit”, one must resort to case law and the several sovereign powers, namely, the federal law dealing with taxation. In this analysis by the courts. In Texas Learning power to subpoena, the power to enforce regard, it is stated: Technology Group v. Commissioner of orders against persons within its jurisdiction, Internal Revenue, 958 F.2d 122 (5th Cir. and the power to maintain a uniform police A state includes an Indian tribal 1992), the following was stated: force. It also had the power of eminent government and any of its subdivi- domain. On the other hand, it did not have sions IRS recognizes as performing The term ‘political subdivision’ is not the power to tax. The Second Circuit Court substantial government functions. A defined in § 170 or in the Treasury held that the New York Port Authority was a political subdivision must possess Regulations accompanying § 170. political subdivision for Internal Revenue ‘recognized sovereign power,’ e.g., Treasury Regulation 1.103-1(b), purposes. the power to tax. however, provides that any division of the government that is a municipal Like the New York Port Authority, Nebraska Am.Jur.2d, Federal Taxation, ¶ 18960 at p. corporation or has been delegated housing authorities do not have the power to 242. the right to exercise part of the tax. (Indeed, very few public housing sovereign power of the government, authorities in the entire country have the In other words, the phrase or term “political is a political subdivision. 26 C.F.R. § power to tax.) However, they usually do subdivision” has a special meaning for 1.103-1(b). Case law both before possess other significant powers delegated issues involving federal revenue that may not and after the promulgation of by the sovereign. Neb. Rev. Stat. § 71- precisely correspond with the general Regulation 1.103-1(b) has required 15,113(12) gives a local housing agency’s understanding of that term as it may be used an entity to be authorized to exercise board of commissioners the power “. . . to in state law. In the Internal Revenue Code, some sovereign powers in order to subpoena and compel the attendance of the term “political subdivision” is not be considered a political subdivision. defined. There is a Treasury regulation, § The power to tax, the power of 1.103-1(b), dealing with whether interest on eminent domain, and the police bonds issued by a state, territory, “or any power are the generally acknowl- continued on next page PAGE 5 THE COUNSELLOR VOLUME 4, ISSUE 1

CHARITABLE either state, and was not subject to Corp is an instrumentality of a state. the debt limiting provisions of the We also conclude that X Development CONTRIBUTIONS TO state constitution. Corp is serving an exclusively public PUBLIC HOUSING purpose by exercising the essential Judge Hand found support for this governmental function of providing AUTHORITIES holding in the test laid down in an low-income housing and community Continued opinion given by Attorney General development for Y Community. McReynolds soon after § 103 was Therefore, contributions and gifts to first adopted: X Development Corp are deductible under section 170(c)(1) of the Code. witnesses and the production of documents, The term ‘political subdivision’ books, records, papers, electronic and other is broad and comprehensive Public housing authorities are recognized as data, and things . . . .” and denotes any division of the being involved in serving a public purpose. State made by the proper This was determined by the Nebraska Further, the same statute, § 71-15,113(39), authorities thereof, acting within Supreme Court in Lennox v. Housing provides that the housing agency has the their constitutional powers, for Authority of City of Omaha, 290 N.W. 451 power “To acquire real property through the the purpose of carrying out a (1940). This opinion upheld the constitu- exercise of the power of eminent domain in portion of those functions of tionality of the original Nebraska public accordance with Chapter 76, article 7. . . .” the State which by long usage housing authority laws. The Court stated: and inherent necessities of The Sixth Circuit, in State of Michigan v. government have always been It is obvious that the legislation was United States, 40 F.3d 817 (Sixth Circuit regarded as public. 30 passed in the exercise of the police 1994), put a similar gloss on this subject with Op.Atty.Gen. 252 (1914), as power of the state to protect the emphasis, however, upon whether the quoted at 144 F.2d at 1004. health, safety, morals and general activities of a political subdivision are for a welfare of its people. We think that public purpose. Also referring to the “[T]he real criterion adopted by the Attorney these objectives subserve a public Shamberg opinion written by Judge Augustus General,” Judge Hand observed, “seems to purpose and as such are proper Hand, the majority of the Sixth Circuit Court have been whether the activities of the subjects for legislative action. Many stated: subdivision were for a public purpose.” states have enacted similar laws and Shamberg, 144 F.2d at 1004; State of we are impressed with the unanimity The pertinent treasury department Michigan, supra, 40 F.3d at 824. with which they have been upheld as regulations, as quoted in Shamberg, . being for a public purpose. . . said that “[t]he term ‘political In a Private Letter Ruling dated December subdivision’ . . . denotes any division 22, 1989, IRS PLR 8951057, 189 WL Supra, 290 N.W. at 457. of the State or territory which is a 597333, one of the issues was whether a municipal corporation, or to which charitable contribution could be made to “X Likewise, it is said: “It is uniformly held that has been delegated the right to Development Corp”, a wholly owned slum clearance and the construction of low- exercise part of the sovereign powers subsidiary of the “State Development Corp”, rent housing projects and urban renewal or of the State or Territory.” The Port of and which was specially created through the redevelopment are for public and govern- New York Authority–“a body politic enactment of that state’s Development Act. mental purposes . . . .” 40A Am.Jur.2d and corporate” through which the No private interests were involved. X Housing Laws, Etc. § 3 at pp. 629-30. states of New York and New Jersey Development Corp was to formulate a built and operated the George program to assist a particular city within the Thus, a public housing authority, based on Washington Bridge, the Holland and state. Among other things, “X Development the foregoing, should be regarded as a Lincoln Tunnels, and other projects Corp has completed 17 low- and moderate- “political subdivision” for purposes of the “operated in the interest of the public income and elderly residential projects deductibility of a charitable contribution as without profit to private persons,” id. containing 3,904 dwelling units.” The ruling set forth in § 170 of the Internal Revenue at 1000--was held to fit this definition concluded: notwithstanding that the authority lacked the power to impose taxes, Based on the information submitted, had no power to pledge the credit of we conclude that X Development continued on next page PAGE 6 THE COUNSELLOR VOLUME 4, ISSUE 1

CHARITABLE ruling on this subject, as far as I have been filing of a tax return, whereas, the Technical able to determine. Advice Memorandum deals with the CONTRIBUTIONS TO limitations on deductions that may be taken PUBLIC HOUSING There are some items which should be for a charitable contribution to an entity that distinguished or discussed. There is a was determined to be a 501(c)(3) AUTHORITIES Technical Advice Memorandum 9036004, corporation and not a political subdivision. Continued 1990 WL 700298, issued September 7, 1990. This deals with a corporation created Next, there is a Revenue Ruling, 74-14, 1974 under the nonprofit corporation act of a WL 34623, holding that a public housing particular state for the purpose of providing authority does not qualify for exemption Code. tax exempt financing for a specific public under section 501 (c) (3) of the Code. That, housing project. The non-profit corporation however, is not the issue here. There have been some Private Letter Rulings was completely controlled by the housing which assume that public housing authorities authority and had the approval of HUD. After Finally, there is a General Counsel are political subdivisions. For example, PLR payment of the indebtedness of this Memorandum, 38921, 1982 WL 204158, 9320043, 1993 WL 168907, of May 21, particular project, all of its assets would vest which also discusses Rev. Rul. 74-14 and 1993, discusses an employee retirement in the housing authority. Nevertheless, the concludes that the housing authority in plan for “E”, an unincorporated association memorandum concluded that this corpora- question also does not qualify for 501 (c) (3) formed by agreement by public housing tion was not eligible for a charitable purposes, even though its subpoena and authorities in states W, X, Y, and Z. deduction which would qualify for the 50% investigatory powers differed in some detail Apparently, the function of the association limitation under § 170(b)(1)(A) of the Code, from the ones discussed in the previous was some kind of insurance pool. The ruling and would include a deduction to a political Revenue Ruling. It should be noted that in concludes “that E is an instrumentality of the subdivision under § 170(c)(1). The the course of this opinion, the writer states: political subdivisions of States W, X, Y, and rationale for this conclusion was that the Z.” entity was not a municipal corporation and It is our opinion that Housing had not been delegated the right to exercise Authority is not a political subdivision Another Private Letter Ruling, PLR any sovereign power, namely, the power of within the meaning of section 1.103- 200112028, 2001 WL 283693, dealt with a eminent domain, the power to tax, or the 1(b) and is therefore not per se nonprofit corporation which was formed by a police power. Therefore, the memorandum precluded from exemption as an particular housing authority under the concluded that “the Corporation is not a organization described in section corporation laws of a particular state. The political subdivision of the state in which it 501 (c) (3). corporation was to assist the authority in operates.” providing public housing. It did not apply for And, the footnote attached to that comment, 501(c)(3) status, although its articles Thus, this Technical Advice Memorandum states: permitted it to do so. The housing authority should be distinguishable from a situation had complete control over the nonprofit where the taxpayer wishes to make a FN3. We conclude that Housing corporation. According to this Private Letter contribution directly to the housing authority Authority is not a political subdivision Ruling, its conclusions were as follows: and not to any affiliate of a housing authority. within the meaning of section 1.103- As stated above, housing authorities in 1(b) despite significant precedent (1) Corporation is an integral part of Nebraska do exercise sovereign govern- treating housing authorities as Authority (a political subdivision of mental powers delegated to them by the political subdivisions under its state’s the State) and not subject to federal State. law. See, e.g., *** The fact that a income taxation. housing authority is treated as a This Technical Advice Memorandum seems political subdivision of the state (2) As a state or local governmental to be at odds with the Private Letter Ruling under state law is not dispositive of unit, Corporation is not required to 200112028, 2001 WL 283693. However, I the issue whether it is a political file federal income tax returns. have been told on more than one occasion subdivision within the meaning of that this is a messy and arcane area of the Nevertheless, despite this seemingly obvious law. The Private Letter Ruling deals with the conclusion, there has been no definitive question of exemption from taxation and the continued on next page PAGE 7 THE COUNSELLOR VOLUME 4, ISSUE 1

CHARITABLE need to demonstrate that some other Claims’ ruling. The Court of Claims stated: sovereign power has been delegated to the CONTRIBUTIONS TO public housing authorities of that state.) Not every transfer of property to the PUBLIC HOUSING United States or to a charitable This conclusion, however, does not entirely institution which is denominated a AUTHORITIES dispose of the matter. Regarding any charitable contribution or gift falls Continued specific donation, particularly a donation of within the ambit of the section. ‘A real estate, the facts of the particular payment of money [or transfer of situation have to be examined. This is property] generally cannot constitute because § 170(c)(1) of the I.R.S. Code a charitable contribution if the section 1.103-1(c). Cf. Ohio County requires that the gift be “made for contributor expects a substantial and Independent Agriculture Societ- exclusively public purposes.” This means benefit in return.’ United States v. ies v. Commissioner, 43 T.C.M. 1126 that the gift cannot be something that is American Bar Endowment, 477 U.S. (1982) (whether an organization is a going to benefit the taxpayer more than the 105, 116-17, 106 S.Ct. 2426, 2432- state instrumentality is a matter of public. Or, to put it another way, the 33, 91 L.Ed.2d 89 (1986). Federal law). donation cannot be something that is given on a quid pro quo basis. 902 F.2d at 1543. I believe that the foregoing is completely erroneous. There is no precedent cited or In Transamerica Corporation v. the United The appellate court, as did the Court of analysis associated with the writer’s States, 902 F.2d 1540 (Fed. Cir. 1990), the Claims, denied the charitable nature of the comment. It pops out of nowhere and donor gave films of substantial value to the gift because the “taxpayer received a quid without any supportive rationale or logic. Library of Congress. However, the gift was of pro quo in the form of a substantial benefit Furthermore, the Memorandum concludes the physical property only. While access to for the transfer of property to the Library, the by holding that Housing Authority is not the the film would be given to researchers transaction falls within the general rule that counterpart of an organization described in engaged in serious research, the donor there was no gift.” Supra, at pp. 1545-46. section 501(c)(3) precisely because of its reserved all right, title and interest to the governmental powers. Also, I note that this property for commercial purposes. The I can conceive of a situation in which a Memorandum states: “This document is not Court of Claims denied the charitable donation might be denied. For instance, a to be relied upon or otherwise cited as deduction. The Court of Claims stated: taxpayer might own an adjoining piece of precedent by taxpayers.” I would concur that property and is willing to make a donation to this Memorandum should not be relied upon The benefits received by [taxpayer] the housing authority of a portion of a because it is fundamentally flawed. In private were (1) continued access for its taxpayer’s property if the housing authority, conversations that I have had with IRS commercial interests to both the in exchange, will confer a benefit to the counsel, it was acknowledged that a physical property in the nitrate taxpayer’s remaining property, such a Memorandum such as this has little value and negatives given and access to the paving a road or putting in a sewer line, etc. can probably be ignored. Library’s preservation copies, [and] But, if the facts show that the gift is being (2) relief from the costs and potential made for proper public purposes, and not for Thus, I conclude, that public housing liability for the storage, maintenance, some special benefit to the taxpayer, then authorities in Nebraska and, generally, and care of nitrate negatives. the gift should qualify for charitable throughout the United States, should be Benefits to [taxpayer] were substan- deduction purposes. regarded as proper donees sufficient for tial, and were sufficient to provide charitable contribution purposes under the [taxpayer] with a quid pro quo for the There is one final particular aspect to this I.R.S. Code. (Caveat: It is conceivable that transfer. These benefits to [tax- matter which may bring us back full circle. the laws of a particular state do not delegate payer], accordingly, effectively de- Even though I have said that a public housing at least one of the three principally known stroyed the charitable nature of the authority ought to be a proper donee for sovereign powers to public housing transfer. charitable donation purposes, despite not authorities, namely, the power to tax, the subpoena power, or the power of eminent 902 F.2d at 1543. domain. I don’t know of any such situation, but if one does exist, then legal counsel may The Court of Appeals upheld the Court of have a difficult time with the I.R.S. He will continued on next page PAGE 8 THE COUNSELLOR VOLUME 4, ISSUE 1

CHARITABLE taking the donation in the name of an 501(c)(3), is a time-consuming effort and affiliate, the housing authority might be able would involve some expense. Thus, the CONTRIBUTIONS TO to deal much more flexibly with the donated circumstances would have to warrant this PUBLIC HOUSING property than it may otherwise be able to do procedure. Absent those circumstances, if it mingled the donation with its other again, ordinarily, as stated above, a donor AUTHORITIES assets. In dealing with its affiliate and its may take a charitable contribution for a Continued affiliate’s assets, the housing authority could proper gift to a public housing authority. not avoid any requirements imposed upon it by state law (see Lycoming County nursing Home Association, Inc. v. Commonwealth of qualifying as a 501(c)(3) organization, it Pennsylvania, 156 Pa.Cmwlth. 280, 627 may not wish to accept the donation directly. A.2d 238 (1993)), but the property ought to If the donation is a substantial one, the be free from HUD rules and regulations. housing authority might consider setting up a subsidiary corporation and qualifying that Of course, starting up such an organization affiliate as a 501(c)(3) corporation. By and getting it qualified as exempt under §

HDLI MEMBER SPONSORS

HDLI is delighted to acknowledge the generous financial support of its GOLD MEMBER SPONSORS:

The Law Firm of Reno & Cavanaugh, Washington, D.C.

The Law Firm of Douglas, Boykin & Ogden, Washington, D.C.

The Law Firm of Ballard, Spahr, Andrews & Ingersoll, nationwide offices

Please contact HDLI at (202) 289-3400 or [email protected] for information on becoming a GOLD, SILVER, OR BRONZE MEMBER SPONSOR. PAGE 9 THE COUNSELLOR VOLUME 4, ISSUE 1

RECENT HUD NOFAs, RULES AND NOTICES

Following are some of the important recent HUD Rules, Proposed Rules, and/or Notices that appear in the Federal Register, along with a brief description.

RECENT NOFAs

Notice Submission Number Date Substance Deadline

E6-1054 1/18/06 Guaranteed Rural Rental Housing Program 6/16/06

FR-5030-N-01 1/11/06 Advance view of General Section to HUD’s n/a FY2006 SuperNOFA,targeted for publication in early 2006.

E5-7629 12/15/05 Treasury Dept’s FY 2006 Funding Round 2006: 5 PM E5-7630 and FY 2007 Funding Round of the on 3/1/06 Community Development Financial 2007: 5 PM Institutions Program on 2/14/07

RECENT HUD RULES

Federal Published Affected Register Effective Date CFR(s) Citation Substance Date

2/9/06 91;570 71 FR 6949 Changes to the consolidated plan regulations 3/13/06 of state and local governments so that the plans are more results-oriented and useful to communities in assessing their own progress toward addressing the problems of low-income areas. Eliminates obsolete and redundant provisions and makes other changes that conform these regulations to HUD’s public housing regulations that govern the PHA Plan.

continued on next page PAGE 10 THE COUNSELLOR VOLUME 4, ISSUE 1

RECENT HUD PIH NOTICES (Office of Public and Indian Housing)

Notice Date Subject Substance Expiration Issued Date

PIH 2/3/06 Disaster Voucher Continuation of temporary rental assistance. 2/28/07 2006-12 Program (DVP)- HUD has waived all requirements related to Families Displaced income eligibility and tenant contribution for by Hurricanes families participating under the DVP for the statutory maximum term of 18 months.

PIH 2/3/06 Integrated Pest Voluntary Guidance on IPM. 2/28/07 2006-11 Management Local rules still govern. (HA)

PIH 2/3/06 Asset Management Provides guidance on identification of 2/28/06 2006-10 projects. PHAs have until 4/21/06 to submit (HA) their project identifications.

PIH 2/3/06 Procurement of Continuation of prior notice 2/28/06 2006-9 Legal Services (Notice 2003-24 (HA)). (HA)

PIH 1/27/06 Electronic Exigent Extends Notice PIH 2005-4 (HA) regarding 1/31/07 2006-8 Health and Safety the electronic exigent health and safety (EHS) (HA) (EHS) System system whereby PHAs certify the correction of EHS deficiencies observed during inspections and outlines procedures for HUD field office staff to document corrective measures.

PIH 1/27/06 Employee Benefit Extends Notice PIH 2005-3 directing PHAs 1/31/07 2006-7 Plans to follow OMB Circular A-87 regarding (HA) employee benefits plan administration, and transmits a change to the Housing Agency (HA) Guidebook: Employee Benefit Plans, 7401.7 G, paragraph 2.8, subparagraph (e), Forfeitures.

PIH 2/1/06 Energy Performance Provides guidance on Energy Performance 2/28/07 2006-06 Contracts Contracts with terms up to 20 years

PIH 1/13/06 2006 HUD Implements the Housing Choice Voucher 1/31/07 2006-5 Appropriations (HCV) funding provisions resulting from (HA) FY2006 HUD Appropriations Act (Public Law 109-115). Continues the 2005 allocation method for calculating and distributing housing assistance payments (HAP) renewal funds, PHA admin. fees, and continues to prohibit the use of renewal funds for over-leasing. PAGE 11 THE COUNSELLOR VOLUME 4, ISSUE 1

RECENT HUD PIH NOTICES CONTINUED

Notice Date Subject Substance Expiration Issued Date

PIH 1/12/06 Native American Provides instructions to tribes and tribally 1/31/07 2006-04 Housing Assistance designated housing entities on the process (TDHEs) and Self- for requesting an advance of IHBG funds Determination Act for FY 2006 in view of funding delays. (NAHASDA) Funding

PIH 1/11/06 Administrative Fee Discusses rescission and recapture of 1/31/07 2006-03 Reserve Recapture FY2005 admin. Fee reserves. Provides that (HA) any unused ACC reserves remaining after December 31, 2005 will be reduced to zero and provides that any budget authority provided to PHAs in calendar year 2005 that exceeds actual program expenses for the same period must be maintained in an undesignated fund balance account.

PIH 1/3/06 Indian Tribes’ Extends Notice PIH 2004-25 (TDHEs), 1/31/07 2006-2 Federal Cash Clarification of submission dates for the form (TDHEs) Transactions Report HUD-272-I Federal Cash Transactions Report ONAP (REV) reinstates 1/3/06 Designation of Reinstates Notice PIH 2005-2 (HA) 1/31/07 Notice PIH Public Housing regarding the requirement for designation 2005-2 Projects. of public housing projects. (HA)

OTHER RECENT HUD NOTICES

Notice Date Subject Substance Effective Issued Date

FR-5031- 2/9/06 Section 8 Contract Corrects contract rates published in the 12/1/05 C-02 Rent Annual Federal Register on 12/1/05 (70 FR 72168) Adjustment Factors, for Midwest and South regions. Fiscal Year 2006: Correction

FR-4995- 2/7/06 Fair Market Rents Confirms eligibility of 24 areas for continuing 3/1/06 N-04 or new eligibility for 50th percentile FMRs.

Note: HUD has special exception procedures to adjust voucher payment standards in areas affected by Hurricanes Katrina or Rita. In areas directly affected by these hurricanes, PHAs are authorized to use voucher payment standards of up to 120 percent of published FMRs, which is significantly higher than the standards permitted for 50th percentile areas. PHAs in these areas may request higher exception pay- ment standards if justified by local rent increases. PAGE 12 THE COUNSELLOR VOLUME 4, ISSUE 1

OTHER RECENT HUD NOTICES CONTINUED

Notice Date Subject Substance Effective Issued Date

FR-5051- 2/9/06 CDBG Disaster Describes the common application, 2/13/06 N-01 Recovery Grantees reporting waivers and common alternative Under the 2006 DOD requirements for these grants. Appropriations Act

FR-5045- 2/2/06 McKinney Homeless State-by-state list of unutilized, underutilized, 2/2/06 N-05 Assistance Act excess, and surplus Federal property reviewed by HUD for suitability for possible use to assist the homeless.

FR-06-927 1/31/06 Lead Paint Notice of proposed consent decree in 1/31/06 United States v. V.T. Fallon dba VTF Properties, No. 05-2830 RJL/AKB in D. Minn. Consent decree between HUD and owner and management company of 11 properties containing 124 units in Minneapolis, MN.

SHAKESPEARE’S REVENGE

“The first thing we do, let’s kill all the lawyers.” -- William Shakespeare

Did you ever want to one-up Satan replies, “Hey things are going great. An International Perspective: somebody who told you a bad We’ve got air conditioning and flush toilets lawyer joke? Here’s the ammu- and escalators, and there’s no telling what In the USA, everything that is not prohibited nition . . . this engineer is going to come up with next.” by law is permitted. In Germany, everything that is not permitted God replies, “What??? You’ve got an by law is prohibited. An engineer dies and reports to hell. Pretty engineer? That’s a mistake -- he should In Russia, everything is prohibited, even if soon the engineer gets dissatisfied with the never have gotten down there; send him up permitted by law. level of comfort in hell, and starts designing here.” In France, everything is permitted, even if and building improvements. After a while, prohibited by law. they’ve got air conditioning and flush toilets Satan says, “No way. I like having an In Switzerland, everything that is not and escalators, and the engineer is a pretty engineer on the staff, and I’m keeping him.” prohibited by law is obligatory. popular guy. God says, “Send him back up here or I’ll One day God calls Satan up on the telephone sue.” and says with a sneer, “So, how’s it going Satan laughs uproariously and answers, down there in hell?” “Yeah, right. And just where are you going to get a lawyer?” PAGE 13 THE COUNSELLOR VOLUME 4, ISSUE 1 CASE CORNER

The following recently-reported cases are chock full of interesting issues:

DISCRIMINATION - Age And the PHA had a contract with a CPA as a threshold. financial consultant who was paid $3,600/ year and received insurance benefits that he HOLDING/RATIONALE 2: Under the ADEA, Alba v. Housing Authority of paid for himself. Defendants argued that “employee” is defined as “an individual the City of Pittston, 400 F. these individuals were independent contrac- employed by any employer.” The state law Supp. 2d 685 (M.D. Pa. Nov. tors. Plaintiff provided evidence that the definition under the state human relations 23, 2005) police used PHA’s vehicles and patrolled code is “any board employing four (4) or only its projects and provided support more persons in Pennsylvania.” Finding that COURT: U.S. District Court for the Middle services as requested by PHA. He also these definitions of the term “employee” District of Pennsylvania. argued that PHA controlled the solicitor were not helpful, the court noted that U.S. since he performed all of PHA’s legal work, Supreme Court precedent mandates that FACTS: A 70-year-old former PHA mechanic since the PHA Board directed him on what to courts are to use a common-law agency test sued the PHA and its officials under the Age do, and since he needed Board approval for to determine employee status. Under that Discrimination in Employment Act (ADEA) his work. As to the CPA, the plaintiff argued test, the court considers the following through Section 1983 for alleged equal that he received a fixed compensation from factors: the hiring party’s right to control the protection violations, and under the state PHA, as well as dental insurance, which is manner and means by which the product is human relations act. Plaintiff contended that only provided to employees. In the accomplished, as well as the skill required, the PHA had an illegal mandatory retirement alternative, the Plaintiff claimed that the PHA the source of the instrumentalities and tools, plan which required him, an employee of PHA and the City of Pittston should be construed the location of the work, the duration of the for over ten years, to retire at age 70. as one employer, and that combined they relationship between the parties, whether Plaintiff subsequently was involuntarily had well over 20 employees during the the hiring party has the right to assign retired and filed an EEOC complaint for age requisite period. additional projects to the hired party, the discrimination. The EEOC dismissed the extent of the hired party’s discretion over claim, finding that since the PHA employed ISSUE 1: Whether the 20 employee when and how long to work, the method of less than 20 employees, it was not covered threshold of ADEA is a jurisdictional or payment, the hired party’s role in hiring and by the statutes. The employee filed suit. substantive element of an ADEA claim. paying assistants, whether the work is part of Defendants’ provided evidence that during the regular business of the hiring party, the requisite periods it only had between 11 HOLDING/RATIONALE l: Substantive. Com- whether the hiring party is in business, the and 14 employees, three of whom worked paring Third Circuit and countervailing state provision of employee benefits, and the tax less than twenty weeks per year. Plaintiff lower court precedent, the court held that treatment of the hired party. The most claimed that the PHA had between 23 and 26 the 20 employee threshold was a weight is to be placed on the right to control employees. In support of his figures, plaintiff substantive, rather than jurisdictional, by the hiring party and the manner and argued that the city police officers who patrol element of an ADEA claim. means that the work is accomplished. The PHA’s projects, and the PHA solicitor and court determined that the fact that the police financial consultant were employees of PHA. ISSUE 2: Whether city police who patrolled officers, CPA and solicitor had employment It was undisputed that the PHA contracted PHA property, and the PHA solicitor and contracts with PHA was not dispositive of the with the City of Pittston for off-duty police financial consultant, all of whom had officers to patrol PHA’s projects. The PHA contracts with the PHA, constituted “employ- also had a contract with the solicitor who was ees” within the meaning of the ADEA for paid $14,000/year and received no benefits. purposes of computing the 20 employee continued on next page PAGE 14 THE COUNSELLOR VOLUME 4, ISSUE 1

Case Corner the Board does not report to the City, and HOLDING/RATIONALE 4: No. The court that the City does not provide any monies to recognized that there is disparity around the Cont’d PHA. The court further found that PHA and country, some courts holding that Section the City are separate entities, the PHA has its 1983 claims asserting an independent own Article of Incorporation, and the Board constitutional claim of age discrimination can does not report to the City. PHA employees still be pursued in addition to an ADEA claim, employment relationship they had with PHA. are paid from rents collected from PHA with others holding the converse. There is a Rather, the court evaluated the individual housing units. Board members are not paid different standard for a constitutionally employment contracts under the foregoing for their duties and are appointed by the based civil rights claim of discrimination and factors. The court found that the police Mayor and City Council for five-year terms. a Title VII discrimination claim. Accordingly, officers’ agreement between PHA and the The court found that, similar to the the plaintiff’s proposed Section 1983 claim, City stated that “off-duty police officers while appointment of federal judges by the if alleged properly, would not merely be a working [i.e. patrolling PHA’s projects] shall executive, in which both branches of restatement of his ADEA claim. The be in full uniform and covered by the City of government still remain separate and standard for a Section 1983 equal protection Pittston.” The Agreement for legal services distinct, simply because PHA board claim requires proof of purposeful discrimi- provided that he would accept employment members are appointed by the Mayor and natory conduct, and the plaintiff must show to provide legal services required by PHA in City Council does not mean that PHA is disparate impact plus some additional the operations of its projects. The financial controlled, managed and owned by the City. “indicia of purposeful discrimination.” The consultant agreement provided that PHA court further found that, in a constitutionally employs him as financial consultant to The court also found that the City cannot based civil rights claim of discrimination, the monitor accounting records and complete dissolve PHA, a duly incorporated non-profit Plaintiff must show that the Defendants required financial reports. Considering organization under the laws of Pennsylvania. purposefully discriminated against him due these agreements, the court found that it was The City could not control the assets of PHA, to his age. In a 1983 claim, the focus is on the clear intent of the parties that these a separate legal entity. There was no the motivation for the defendant’s action. In persons be independent contractors and not evidence that any of PHA properties are an ADEA claim, the focus is on the effects of employees of the PHA. The court found that under common ownership with the City. the defendant’s action on the plaintiff. there simply was no evidence that these There was no evidence that the City controls people were dependent upon the PHA for any of PHA’s employees, other than that it ISSUE 5: Whether plaintiff had a Section their livelihood, and that the PHA had no appoints PHA Board members. While PHA 1983 claim against the PHA. control over these persons’ work product. contracts with the City for its off-duty Police Officers to patrol its projects, showing a HOLDING/RATIONALE 5: No. The court ISSUE 3: Whether the city and PHA should be degree of functional integration of opera- found that there was no dispute that the considered a single employer, or joint tions, there was not control of the Police by PHA’s mandatory retirement age policy employers, for purposes of the ADEA. PHA, and there was no common manage- applied equally to all of its employees and ment of either the Police by PHA or of PHA that plaintiff was not singled out for HOLDING/RATIONALE 3: The court decided employees by the City. Moreover, the court application of the policy. Moreover, the court this issue in favor of PHA. Plaintiff provided found there was no evidence that the PHA found that the plaintiff failed to provide an evidence that the Mayor of Pittston is both and the City share office space, that the City independent constitutional claim for age the Controller of the City and the PHA. The controlled any of PHA’s records, including discrimination, finding that his Section 1983 Mayor and city council also appoint and employment records, or that the City and claim was simply a reaverment of his ADEA terminate all Board members. Plaintiff also PHA had joint employment. There was no claim. The court found that Defendants argued that the security agreement between evidence that the two legal entities combine applied PHA’s mandatory retirement policy the City and PHA shows that the Mayor and payroll or any other financial records. to Plaintiff, that the policy applied to all of PHA controlled the payment to the Police. PHA’s employees, and that Plaintiff was The court found that under both the single ISSUE 4: Whether the ADEA provides the made to leave his position with PHA only employer standards and the joint employers exclusive federal remedy for Plaintiff’s age because he became 70 years old. However, test, the PHA and Pittston City were neither a discrimination claim, thereby requiring the court found that the plaintiff failed to offer single employer nor a joint employer. The dismissal of Plaintiff’s Section 1983 equal court relied on the facts that the City did not protection claim. have complete control over the PHA Board, continued on next page PAGE 15 THE COUNSELLOR VOLUME 4, ISSUE 1

Case Corner the PHA on the Title VII claims because of in the trial and his eventual firing, there was plaintiffs’ failure to exhaust administrative a causal connection between the testimony Cont’d remedies. At trial, the court denied the and the firing. PHA’s motion for judgment as a matter of law at the close of the plaintiffs’ case. The jury HOLDING/RATIONALE 2: Yes. To establish a returned a verdict in favor of plaintiffs finding causal connection, a plaintiff must prove an independent constitutional claim for age that the PHA retaliated against plaintiffs in either (1) an unusually suggestive temporal discrimination. The court further found that, violation of the state human relations law proximity between the protected employee even if Plaintiff did assert a constitutional and section 1983. The Court, however, activity and the adverse action, (2) a pattern claim for age discrimination independent directed a verdict in favor of the PHA on the of antagonism coupled with timing to from his ADEA claim, he failed to show that he section 1983 claim because the jury also establish a causal link, or (3) the evidence was deprived of a constitutional right by found that the PHA’s Executive Director gleaned from the record as a whole infers Defendants since neither state nor federal whom the Court determined to be the PHA’s causation. In this case, the Court agreed that law clothed Plaintiff’s employment with a sole policymaker, did not personally order or the gap of time between one plaintiff’s right enforceable through an action under acquiesce in any retaliation against plaintiffs. involvement in the trial and his eventual firing Section 1983. The verdict on the PHRA claim stood. The (approximately ten months) is not “unusually jury awarded one plaintiff back pay in the suggestive” of a retaliatory motive. However, Dismissing all federal claims, the court amount of $ 208,676 and compensatory viewing all facts in the light most favorable to allowed the employee’s state claims to damages of $102,000. The jury awarded the the plaintiff the Court decided that it was proceed against the individual supervisory second plaintiff compensatory damages in reasonable for the jury to find a “pattern of Defendants; however, it declined to exercise the amount of $ 70,000. The PHA again antagonism” against him by the PHA supplemental jurisdiction over those claims moved for judgment as a matter of law or in between his pretrial and trial testimony and since the federal claims were dismissed. the alternative for a new trial, arguing that his eventual termination. That pattern there was no causal connection between the included: 1) an involuntary change in his testimony and the employment actions and employee status from Assistant General thus the verdict was against the weight of the Manager to Project Manager, thus losing a $ DISCRIMINATION - evidence. 425 stipend to cover the costs of using his Employment private vehicle for PHA business; 2) the hard ISSUE 1: Whether a jury trial under the state drive on his computer was vandalized at work Marra v. Philadelphia Hous- human relations law is required in federal and the PHA took no action; 3) being ing Author., 404 F. Supp. 2d court. excluded from a meeting of supervisors to which, prior to his testimony, he would have 839 (E.D. Pa. Dec. 9, 2005) HOLDING/RATIONALE 1: Yes. While it was expected to have been invited to attend; 4) a clear that under state law the plaintiffs had subordinate of his was demoted and COURT: U.S. Dist. Court for the Eastern no right to a jury trial in employment transferred to another department, without District of Pennsylvania. discrimination actions brought under the his consent; and 5) at a meeting of state human relations act, the court found supervisors, the PHA’s Executive Director, FACTS: Two PHA employees brought Title VII that a jury trial is is required in federal court gave him a “look of disgust” when he (under Section 1983) and state human because, even if not made available under admitted that he had testified against the relations act claims against the PHA, claiming the state statute, a jury trial is mandated PHA, and finally 6) he was terminated that it unlawfully retaliated against them after under the Seventh Amendment which because the PHA claimed it was reorganiz- they testified pursuant to subpoena in a preserves the right to a trial by jury in suits at ing. discrimination case in which the PHA was a common law, where the value in controversy defendant. The first plaintiff argued that he exceeds twenty dollars. The court found that ISSUE 3: Whether the PHA’s actions were was fired in retaliation; while the PHA federal law, not state law, determines the retaliatory and its proferred reasons contended that he was terminated due to a right to a jury trial when pursuing a state- pretextual. reorganization. The second plaintiff claimed created right in federal court. that he was demoted; while the PHA contended that he volunteered to be ISSUE 2: Whether, notwithstanding a 10 transferred to the new position. The trial month gap between one plaintiff’s testimony court granted summary judgment in favor of continued on next page PAGE 16 THE COUNSELLOR VOLUME 4, ISSUE 1 Case Corner reputation, humiliation, and mental anguish of the facts giving rise to the termination of because such do damages do not constitute their Section 8 benefits, whether notices that Cont’d “bodily injury” under state law. Here, were essentially form letters that failed to plaintiffs sought compensation for “past and specify the particular conduct at issue future non-economic losses, including provided ample due process. extreme emotional distress, loss of HOLDING/RATIONALE 3: Yes. The court reputation, shame, humiliation, pain and HOLDING/RATIONALE 1: No. The court found that a reasonable jury could find that suffering, inconvenience, mental anguish, found that both the initial notices and the the PHA’s actions following the testimony and impairment in quality of life.” ultimate decisions, essentially form letters, were retaliatory. The court also found that a Accordingly, the court found that plaintiffs fell woefully short of the level of specificity reasonable jury could find that the proferred were not entitled to delay damages. that due process requires. The court found reasons were pretextual since, in the case of that nowhere did these documents specify the employee fired on account of the who had violated what specific obligation, reorganization, he was the only manager DUE PROCESS when the violation occurred, and neither who lost his job. gave even a rudimentary description of the incidents giving rise to the charges. The Driver v. Hous. Auth., Nos. ISSUE 4: Whether the jury’s finding that (1) court found that actual notice would not 2005AP410 2005AP411, 2006 the PHA retaliated against plaintiffs in suffice since federal regulations mandate violation of the PHRA and (2) the finding that Wisc. App. LEXIS 124 (Feb. 8, written notice, and strict compliance is the E.D. did not personally direct or 2006) imperative as a matter of law and public acquiesce in any retaliation against plaintiffs, policy. The court stated that, by reading an are inconsistent. COURT: Court of Appeals of Wisconsin, “actual notice” exception into the regulatory District 2 scheme, it would invite housing authorities to HOLDING/RATIONALE 4: No. The court dispense with proper notice whenever they found that the verdicts were consistent. FACTS: This case involved a consolidated determined for themselves that the tenant Distingishing the proof necessary under appeal of two tenants to whom a PHA sent “must have known” the basis for the section 1983 and the state claim, the court notices terminating their section 8 benefits allegations against them. Tenants would found that, while under the federal law, using language that they had violated a have no recourse unless they could prove, plaintiffs had to prove that the E.D. as the “family obligation.” In one case, a tenant based on a record that may be sparse or sole PHA official with final and unreviewable had been arrested for allegedly committed a nonexistent, that they did not actually have authority was responsible for the action robbery and also was believed to have such notice. which deprived plaintiffs of their constitu- another individual living with her, which she tional rights, under the state law, liability is denied. In the other case, members of the imposed upon the PHA for the discriminatory household fought outside of the unit and one conduct of any agent of PHA who was acting stabbed the other. Both were arrested. After within the scope of their employment, receiving their termination notices, each regardless of the E.D.’s personal involve- party requested and received an informal ment or knowledge. hearing, after which HARC issued a written decision terminating their assistance for ISSUE 5: Whether delay damages were violating their “tenant responsibility.” The available for their compensatory damage notices were devoid of any recitation of the awards. particular facts giving rise to the termina- tions. The trial court granted summary HOLDING/RATIONALE 5: No. The court judgment for the PHA on the ground that found that, under state law, delay damages both plaintiffs had “actual knowledge” of the are available when “seeking monetary relief charges against them and had an for bodily injury, death or property damage.” opportunity to prepare for the hearing. The Pennsylvania courts have held that delay tenants appealed. damages are not available where a plaintiff is seeking recovery for emotional injury, loss of ISSUE 1: Given that tenants had actual notice

Copyright 2006, Housing and Development Law Institute