PHA Not Liable for Relocation Benefits

  Facts: A resident lived in a formerly federally subsidized property. From 2014 to 2017, the site’s physical conditions deteriorated, as shown by failing Real Estate Assessment Center (REAC) inspections and by the resident’s personal account of the poor conditions in his unit.

The site first failed a REAC inspection, receiving a failing score of “35c,” in April 2014, causing the owner to default on the Housing Assistance Payments (HAP) contract and prompting HUD action. HUD advised the owner that repairs must be made in a timely manner or enforcement actions would be taken. In August 2016, HUD issued a $2,000 civil penalty for failing to file required documents. REAC inspected the site again in December 2016, and the site received another failing score of 9c.

Later that month, HUD also conducted a Management and Occupancy Review and rated the management “unsatisfactory.” After that inspection, HUD issued a Notice of Default and Compliance, Disposition, and Enforcement Plan (CDE Plan) to the owner in February 2017. That notice required the owner to address the unacceptable conditions at the site within 60 days and to replace the management agent at the site.

After another failed inspection and with the owner remaining unresponsive, HUD terminated the contract. HUD is limited to the enforcement actions available to it by statute and contract. HUD cannot force compliance. Termination is typically a last resort and used only if an owner refuses to comply with HUD’s repeated demands. Here, termination was the only available remedy. As a result of termination, the residents were offered relocation benefits and a tenant protection voucher. The owner sold the site to a new owner.

The resident went through the process of relocating and eventually moved into a newly constructed apartment in the neighborhood. The new apartment met the applicable Housing Quality Standards, and the PHA authorized the use of a voucher there. On Nov. 16, 2018, the resident moved into his new unit about 0.4 miles from his former unit. HUD offered relocation benefits, including moving expenses and transportation costs, to the resident. On Nov. 27, 2018, the resident filed for his final benefit check pertaining to the move and received a total of $2,026 in relocation cash benefits from HUD.

The resident then sued the PHA in an effort to remain in his old unit despite the unsanitary and unsafe conditions and to force rehabilitation of the unit.

Ruling: A Pennsylvania district court dismissed the resident’s claims against the PHA.

Reasoning: The resident’s complaint stated the PHA violated the Uniform Relocation Assistance and Real Property Acquisitions Act (Uniform Act). He asserted that the PHA failed to provide him with relocation notices, notices of appeal rights, and referrals to comparable apartments, to which he alleges he was entitled under the Uniform Act.

The court found that the resident wasn’t a statutory “displaced person” under the Uniform Act. Therefore, he lacked standing to assert a claim for those benefits under the act. The Uniform Act grants rights to “displaced persons” and places certain obligations on a “displacing agency.” A “displaced person” is defined as “any person who . . . moves from real property . . . as a result of the acquisition of such real property . . . or as the result of the written order of the acquiring agency to vacate real property, for a program or project undertaken by a Federal agency, or with Federal financial assistance” [42 U.S.C. §4601(6)]. The phrase “program or project” means “any activity or series of activities undertaken by a federal agency or with federal financial assistance received or anticipated in any phase of an undertaking in accordance with federal funding agency guidelines” [49 C.F.R. §24.2(a)(22)]. The regulations also define “[p]ersons not displaced” in a nonexhaustive list, including “[a] person who is not required to relocate permanently as a direct result of a project,” to be determined by the agency.

The court found that the resident didn’t have to move because of the acquisition, rehabilitation, or demolition of a property undertaken by a federal agency or with federal money, but rather because the owner allowed the site to fall into disrepair and a private entity wanted to fix up the building. The only federal action taken here was HUD’s ending of a funding stream to the owner, not the undertaking of a federally funded project. Additionally, the resident didn’t prove that HUD decided to relocate the tenants as part of a plan by a third party to acquire, rehabilitate, or demolish the property.

The resident therefore wasn’t a “displaced person” under the statute, and he couldn’t assert an injury based on the failure of the PHA to provide him with relocation benefits. He didn’t have an enforceable federal right regarding any damages allegedly caused by the PHA based on the Uniform Act.

•  Goodwin v. Miller, March 2019