CA Court Ruling: Housing Authority Must Exempt Lump Sum Income Payments
Legal Services E-lert
Bibliographic Info:
Author: Kurt Orzeck
Source: Santa Monica Patch, “Disabled, Low-Income Tenant Wins in Suit Against Housing Authority”
Date: July 22, 2011
Santa Monica Patch reports: “Sheila Finley, a 64-year-old Santa Monica resident who has disabilities and is on a Section 8 voucher, recently scored a victory in a lawsuit against the Santa Monica Housing Authority. The case could have national implications, according to the Legal Aid Foundation of Los Angeles, which helped represent Finley in the case. The authority incorrectly increased Finley's monthly share of rent, per the ruling made by Los Angeles County Superior Court Judge James C. Chalfant. The authority had counted distributions from the trust fund that Finley received as income. Finley had informed the Housing Authority that she would be receiving settlement money stemming from two lawsuits against a former employer of hers, and that a Special Needs Trust had been established for the payment. But after Finley's trustee started making deposits into the trust on her behalf, the Housing Authority raised her rent. Under Section 8, a tenant pays no more than 30 percent of his or her income in rent. Finley's share of her monthly rent is $257. It would have gone up $87 had the trust been considered to be part of her income. Chalfant entered judgment for Finley on June 30. He cited a federal regulation that exempts lump-sum income payments, such as ones that come from personal-injury settlements, according to the Legal Aid Foundation. The foundation—which helps families and individuals through programs that protect affordable housing, economic stability and health—also said the case could have ‘a national impact’ as it is ’a long-awaited interpretation of complex federal regulations.’ ‘We are pleased with the outcome of this case,’ Legal Aid Foundation attorney Denise McGranahan said. ‘It is our hope that all Section 8 participants who receive lump-sum income will be treated equally regardless of whether that money is placed in a checking account, an irrevocable trust or under the person’s mattress.’ The Western Center on Law & Poverty, which is California’s biggest support center for the state’s neighborhood legal services program, also represented Finley.”