Spokane7
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October 12, 2010 in City
Woman sues over housing assistance
Special-needs trust reduces her federal subsidy
Diana Harding, right, who depends on SSI and a housing voucher, listens to attorney Cheryl Mitchell on Friday at Mitchell’s office.
(Full-size photo)
A disabled mother living on federal assistance could very well end up homeless after inheriting money from her father who died last year.
The sum, $60,000, is not enough to sustain the 55-year-old north Spokane woman, but it is enough to cause her to lose the federal housing subsidy that allows her to live in a duplex apartment with her two teenage children.
“I can’t lose my housing,” said Diana Harding. “I have no other place to go.”
Harding is suing the Spokane Housing Authority, doing business as Northeast Washington Housing Solutions, which administers her Section 8 housing vouchers, over the public corporation’s interpretation of federal rules about how she uses her inheritance.
The housing authority says it is only following U.S. Department of Housing and Urban Development rules designed to protect federal aid from being abused.
Harding qualifies for Supplemental Security Income because of post-traumatic stress disorder resulting from abuse she has suffered.
To maintain her SSI benefits, as well as her eligibility for Medicaid, the state and federal health insurance for the poor, Harding’s Spokane attorney Cheryl Mitchell established for her a special-needs trust, which was approved in November by Superior Court Judge Michael Price.
Such trusts, widely used to protect disabled persons on governmental programs, are to be used to enhance the life of the beneficiary, but not to replace goods and services provided by Social Security and Medicaid.
The trust cannot be used for food, clothing or shelter. Some of the money from Harding’s trust has been distributed for such things as repair of her 18-year-old son’s car, a computer for her 17-year-old daughter and counseling for herself.
After paying her legal fees, trustee fees and other distributions on Harding’s behalf, about $30,000 remains in her trust.
However, the housing authority does not recognize the protections and counts every dollar distributed from it as income. Persons receiving Section 8 vouchers must spend 30 percent of their income on housing. The federal subsidy covers the rest.
In March, the housing authority advised Harding that her share of her $800 rent would increase from $122 to $438 a month and that if the trust distributions continued, she would lose her rental assistance entirely.
Mitchell challenged the decision and received an “informal review” by the housing authority. The hearing officer, Yvette Buckley, who supervises the employee who made the decision to increase Harding’s rent, upheld the decision. Outside of the courts, there is no further appeal.
Steve Cervantes, director of Northeast Washington Housing Solutions, says the housing authority has a responsibility to uphold the Code of Federal Regulations, which states, “Any income distributed from the trust fund shall be counted when determining annual income.”
However, housing and disability rights attorneys dispute this interpretation.
Thomas Beltran, a disability rights attorney in Los Angeles who specializes in special-needs trusts, says there are exceptions on “temporary, nonrecurring or sporadic income” distributed at the discretion of a trustee.
“If you can’t budget for it, it’s not countable,” Beltran said. “If Spokane Housing Authority wanted to interpret the rules in a way that didn’t impact her at all, they could.”
Further, the overarching duty of the states, he said, is to uphold the Olmstead decision in which the U.S. Supreme Court affirmed the right of individuals with disabilities to live in their community and not be institutionalized.
But housing authorities across the nation interpret income distributed from trusts like Harding’s in different ways, Beltran said.
Cervantes said his agency’s interpretation was upheld by the HUD office in Seattle.
“A one-time withdrawal could be an exception, but steady withdrawals to supplement living expenses must be counted,” Cervantes said. “We can’t make arbitrary exceptions.”
In June, Price issued a temporary injunction barring the housing authority from raising Harding’s share of her rent until the court can decide her case.
Currently, there are 4,622 Spokane County households receiving Section 8 rental assistance, and there are 1,600 on a waiting list.
If Harding is terminated from the program, Mitchell said, it is possible she will never again receive housing assistance. She will not be able to afford fair market rent, and she will most likely become homeless.
“It’s punitive to say to a disabled person, ‘You’re disabled; you don’t deserve a better life,’ ” Mitchell said, adding that her client has used her inheritance to help her children. “Do we want the children of the disabled to also be stuck not being able to better their lives?”
Rights panel poorly understood 
elcee1987 on October 12 at 7:32 a.m.
Perhaps I’m not understanding correctly, but it seems like her trust was set up to not pay food/shelter specifically to circumvent the system, and the Spokane Housing Authority simply closed her loophole. I’m also not clear on why $30,000 isn’t enough to pay a $438/mo rent payment. If it were $3,000, I’d understand her concern, but a year’s worth of rent for her is less than $6,000 so assuming she’s already living frugally, how could she possibly become homeless within a year with $30,000 in the bank?
However, I understand she’s using some of that money for counseling, which I commend, and perhaps that will help her to heal from her PTSD, enabling her to re-enter the workforce. Still, in Spokane, $30,000 is a lot of money.
opiemuyo on October 12 at 7:53 a.m.
Boy, tough spot. I guess the lesson learned is don’t depend on the government for your day to day existence, and depend on yourself. Radical concept.
Scoutster on October 12 at 9:10 a.m.
As I wrote last night…
The problem is she CANNOT spend the money on rent.
With a special needs trust she is forbidden to spend it on necessities.
Yup. It’s dumb. But that’s how it works.
The point is this woman is caught between two competing policy positions: 1)People receiving subsidized housing HAVE to be cash poor and 2) People with cash don’t need subsidized housing.
Yes, the sensible thing would be to allow her to apply the funds to current and future rent. She can’t.
bumblebeetuna on October 12 at 10:18 a.m.
Lots of disabled people work. Boo ya!
Rock60 on October 12 at 10:37 a.m.
The inheritance is a chance to start fresh and stand on her own two feet. Instead of wasting the funds on a lawyer to evade the system, she should look into a budgeting/money mgmt. course and rejoin the system as a self-sufficient society member. She may find she likes the freedom of being out from all the regulation welfare entails.
macdoodle on October 12 at 10:39 a.m.
This sounds simple to resolve fairly.
She should be granted a spend down period
to use the money for uncovered medical/dental /optical psych
more accessible furniture, computer , transportation/insurance and other costs that will make her life long healthier.
If she isn’t too disabled to work with better and more current education she should be allowed to use it for that. With understanding of the 70% unemployment rate for people with disability who want to work pre depression 2008 this is a higher risk use of the money.
0r allowed to pay full rent, but stay and not lose the voucher, until its spent down.
maria on October 12 at 1:33 p.m.
I think she should buy a motor home and live in WalMart parking lots.
JFRENCH on October 12 at 2:12 p.m.
Milking the system is fun!
ameneyman on October 12 at 3:23 p.m.
why don’t you use your money for a down payment on a house and have hud and fha help youfind and pay for the house? Hud owns houses and offers them for sale at affordable and attractive prices.
ameneyman on October 12 at 3:29 p.m.
You may have to re-apply for hud once your money is gone. It may take a while due to waiting list but you are not alone. There are many people living on disability without hud or any other help but they somehow manage.
PlanB on October 12 at 10:27 p.m.
The problem with programs like this is that they force you into poverty. There is no easy solution.
The special needs trust should be able to avert that, but if she’s taking distributions from the trust that are reoccurring for not for her own benefit, then that seems to go against the spirit of the trust.
Moonstone on October 14 at 10:30 a.m.
So, this woman lost half of her inheritance to the attorney that set up the trust, and she will likely lose the rest to the attorney battling a $438 a month rent payment?
This isn’t her entire $800 a month rent. Nowhere in the article did it say she lost, or would lose her housing. What I read stated her rent portion went up because she has income paying certain expenses.
How many of the 4622 families on the Section 8 program have to count money from relatives as income? Why should this trust be any different? In fact, how many of the 4622 families wish they had $30,000 in the bank to assist with their day-to-day expenses (excluding food, clothing and shelter, obviously).
What I also read in the article stated the law protecting the trust was intended to maintain social security and Medicaid benefits, not housing.
I highly doubt the attorney is working pro bono on this, so it appears it will be a moot issue once she has sucked all the money out of her client. I also fail to make the attorney’s connection to how the rent increase of her client equates to the continuation of poverty amongst her children. She’s 55, aren’t her children adults capable of taking care of themselves?
Nice try for the pity party, but I don’t have 30 grand in the bank, I don’t have the luxury of a meager $400 rent each month, and I don’t have any of my housing or medical benefits paid by the government.
I only feel sorry that everyone seems to be taking her money from her negating the original purpose. Evidently the trust cannot pay for rent, but it can support her children and her lawyer… for a while.