Hopkins To Join Lawsuit Against Feds Over HRA Cuts

Update: At Tuesday’s City Council meeting, members agreed to support the litigation efforts provided they received more information on the organizations overseeing the litigation and how the money to fund it would be spent.

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Hopkins’ Housing and Redevelopment Authority may join with housing authorities across the country to sue the federal government over penalties for saving too much money.

New rules that President Barack Obama included in his budget request, and Congress authorized, reduce federal funds for public housing authorities that have “excessive” savings—defined, in Hopkins’ case, as a fund balance greater than six months of typical operating expenses.

Last year, Housing and Redevelopment Authority (HRA) received $116,000 from the federal government. The rule change means it got nothing from the federal government this year instead of the approximately $135,000 it could have received if Congress had agreed to full funding.

Adding to the difficulties, the HRA didn’t learn the federal government was withholding money in 2012 until March.

Hopkins Public Housing Manager Stacy Unowsky has said the news has forced the HRA to cast a more critical eye on upkeep, only doing the projects that can’t be put off.

“It’s hard to plan for something like that,” Unowsky said. “We’ve had to be very selective about what we can do maintenance-wise.”

The “operating reserve offset,” as the fund balance penalty is called, is intended to make up for what the National Association of Housing and Redevelopment Officials (NAHRO) says is a $1 billion shortfall for the U.S. Department of Housing and Urban Development (HUD) in 2012. The difference is made up by taking away money from agencies, like Hopkins’ HRA, that have reserves above a certain level.

NAHRO argues that this punishes good management. The organization also says it’s unfair to “change the rules in the middle of the game”—particularly since HUD never set a limit for reserves.

Unowsky noted that it’s taken years for Hopkins to build up its savings. When she started working for the city 10 or 11 years ago, the HRA didn’t have any reserves.  

“It doesn’t get built up in just one year,” she said.

NAHRO and the Public Housing Authority Directors Association (PHADA) are overseeing litigation to overturn the new rules. Tuesday night, Hopkins staff will ask the HRA to contribute $2,000 to those litigation efforts in the hope that it could result in monetary damages and rulemaking that would prevent future offsets or give housing authorities more notice about changes.

It’s not yet known when such litigation would begin. For now, the issue is mostly at the national level. NAHRO and PHADA have their annual meetings in July, and Unowsky expects more information to be available afterward.

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