Understanding Your Eligibility to Participate
Before the Public Housing Authority (PHA) can enter into a payment contract for your property, it must first verify that you, the property owner, are eligible to participate in the Housing Choice Voucher (HCV) program.
This is not about your tenant’s eligibility; this is a separate approval process focused on you as a business partner. Think of it as the PHA’s due diligence to ensure it partners with responsible and compliant landlords.
The regulations outline two types of disapproval:
- Mandatory Grounds: These are non-negotiable.
- Discretionary Grounds: These are based on the PHA’s policies and your history as an owner.
Mandatory Grounds for Disapproval
There are certain situations where a PHA must deny your participation in the program. These are serious, federally-level flags that automatically disqualify an owner. According to the HAP Contracts handbook, the PHA is prohibited from approving you if:
- You are Debarred or Suspended: The federal government maintains a list of individuals and companies that are debarred, suspended, or subject to a “limited denial of participation.” This effectively means you have been blacklisted from participating in federal programs due to past violations.
- You are Facing Fair Housing Legal Action: If HUD informs the PHA that the federal government has an active administrative or judicial action against you for a violation of the Fair Housing Act or other civil rights laws, you cannot be approved.
- You Have a History of Fair Housing Violations: If a court or administrative agency has already determined that you violated the Fair Housing Act or other equal opportunity requirements, the PHA must deny your participation.
Caution
These are absolute prohibitions. There is no appeal or waiver process at the local PHA level for these items. Ensuring you are in good standing with federal regulations is a fundamental prerequisite for participating in the HCV program.
Discretionary Grounds for Disapproval
Beyond the mandatory denials, the PHA has the authority to disapprove an owner based on their past actions and business practices. These rules are designed to protect the integrity of the program, ensure tenants are housed in quality units, and avoid partnerships with landlords who have a history of non-compliance.
The PHA may disapprove you for any of the following reasons:
- Violating HAP Contracts: You have a documented history of breaching obligations under a previous HAP contract, such as failing to perform maintenance.
- Fraud or Criminal Acts: You have committed fraud, bribery, or any other corrupt or criminal act in connection with a federal housing program.
- Drug-Related or Violent Criminal Activity: You have previously participated in any such criminal activity.
- Poor Maintenance History: You have a pattern of failing to maintain units in accordance with Housing Quality Standards (HQS).
- Failing to Evict Problem Tenants: You have a history of refusing to evict tenants who engage in activity that threatens the health, safety, or peaceful enjoyment of other residents.
- Violating Housing Codes: You have a known history of renting units that fail to meet state or local housing codes.
- Unpaid Taxes or Fines: You have outstanding state or local real estate taxes, fines, or other assessments on your properties.
Tip
Check the Administrative Plan
A PHA must define its specific policies for discretionary disapproval in its Administrative Plan. This public document is your local rulebook. It is a best practice to familiarize yourself with your PHA’s plan to understand exactly what historical behaviors they look for when approving new owners.
Specific Prohibitions
Two areas of eligibility are so common and critical that they warrant special attention: renting to relatives and conflicts of interest.
Renting to Relatives
As a general rule, you cannot lease your unit to a relative under the HCV program. Program regulations are very specific about what constitutes a “relative” in this context.
The prohibition includes leasing to a:
- Parent
- Child
- Grandparent
- Grandchild
- Sister
- Brother
This applies to any member of the assisted family.
Important
The Reasonable Accommodation Exception
There is one major exception to this rule. The PHA can approve a tenancy with a relative if it is determined to be a reasonable accommodation for a family member with a disability. For example, if a person with a mobility impairment needs to live in their parent’s accessible, ground-floor unit, the PHA may approve it. This is reviewed on a case-by-case basis.
Conflicts of Interest
The program has strict rules to prevent self-dealing or the appearance of it. A “covered individual” cannot have any direct or indirect financial interest in a HAP contract.
A “covered individual” includes:
- A present or former member or officer of the PHA.
- An employee or agent of the PHA who can influence program decisions.
- A public official or legislator who has responsibilities related to the program.
- A Member of the U.S. Congress.
This prohibition also extends to the immediate family members of any covered individual. When you sign the HAP contract, you are certifying that no such conflict of interest exists. If a potential conflict arises, it must be disclosed to the PHA and HUD immediately. In very specific circumstances, the PHA can request a waiver from HUD for “good cause,” but this is a high bar to clear.