Section 220

Citation: Section 220
Parent Document: Tenants' Council of Tiber Island-Carrollsburg Square v. James Lynn, Individually and in His Capacity as Secretary of Housing and Urbandevelopment, 497 F.2d 648 (1973)
Jurisdiction: United States (federal)
Effective Date: 1973-12-20
Original Source: https://www.courtlistener.com/opinion/319420/tenants-council-of-tiber-island-... ↗

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Pursuant to this authority, the Secretary promulgated a regulation providing that in reviewing a developer's quests for rent increase HUD will consider the economic soundness of the project and a reasonable return on the investment consistent with reasonable rentals to tenants. 24 C.F.R. 207.19(e). While the HUD regulations are not entirely clear as to the objectives sought during review of rental increases,18 it is our sense that taken as a whole they were not intended to establish a legally protected tenant interest in the setting of rents. The government's interest as a mortgagee in the economic soundness of the project accounts for a concern that rentals be 'reasonable.' This concern would not necessarily coincide with that of the mortgagor. The government may have attitudes toward risk, and preferences for distribution of profits over time, different from those of a project developer. Moreover, the government will be concerned with external effects of a developer's management decisions on the character of property not owned by the developer but within the total area upgraded through the government's efforts. A developer might, for example, regard high rents with the likelihood of a high turnover rate or a substantial vacancy rate as offering the best opportunity to maximize his profits. But turnover and vacancies may affect the appearance of the larger residential community and the quality of neighborhood life in general-- effects to which the government involved in the entire upgraded area may be more sensitive than a single landlord.19

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