HomeMy WebLinkAboutMINUTES - 05112004 - SD4 HOUSING AUTHORITY OF THE COUNTY''OF CONTRA COSTA
TO: BOARD OF COMMISSIONERS
FROM: Robert M�Ewan, Executive Director
DATE: May 11, 2004
SUBJECT: ACCEPT REPORT FROM EXECUTIVE DIRECTOR ON THE STATUS OF THE SECTION
8 HOUSING ASSISTANCE PROGRAM
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
1. RECOMMENDED ACTION:
ACCEPT a report from the Executive Director on the status of the Section 8 Program (information
only).
II. FINANCIAL IMPACT:
Nene.
Ill. REASONS FOR RECOMMENDATION/BACKGROUND
There have been recent changes on how HUD funds the Section 8 Housing Choice Voucher
program that have significant impact financial impacts on the Housing Authority and on the number of
families served.
IV. CONSEQUENCES OF NEGATIVE ACTION:
None.
CONTINUED ON ATTACHMENT: X SIGNATURE
RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD
COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON I� 11, 7004 APPROVED AS RECOMMENDED x OTHER
VOTE OF COMMISSIONERS
I HEREBY CERTIFY THAT THIS IS A
X UNANIMOUS (ABSENT * ) TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
COMMISSIONERS ON THE DATE SHOWN.
ATTESTED May 11, 7004
JOHN SWEETEN,CLERK OF
THE BOARD OF COMMISSIONERS
AND COUNTY ADMINISTRATOR
BY I`j 't -f ( '�y EPUTY
H:\JudyHayes\MSOFFICE\WINWORD\BOARD\BO-Section 8 Crisis Update.doc t r,
HOUSING AUTHORITY
OF THE
COUNTY Of CONTRA COSTA
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Me/�
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orandum JF ord86le koUsing soluticns
Date: May 25, 2004
To: Board of Commissioners
Advisory Housing Commission
From: Robert McEwan, Executive Director
Subject: Status of HUD / Section 8 Funding ® Crisis Felt Throughout the
Nation
Information Only
Introduction
There is budget and policy activity occurring in Washington, D.C. that directly
and immediately affects our agency and agencies across the country. This memo
offers information regarding the status of the Section 8 Housing Choice Voucher
program in our agency and at the federal policy level. Section 8 is by far the largest
housing program operated by this housing authority and serves nearly 7,000 low-
income Contra Costa families and seniors and has an annual budget of nearly $80
million. This program provides rent subsidy, in the form of housing assistance
payments, to these families that assures they pay no more than 30% of the income for
rent. The average monthly subsidy paid by the Housing Authority on behalf of a low-
income family is around $950.
Through a series of actions, HUD has been converting the current program from
a unit-based to a dollar-based program. This means that HUD previously committed to
supporting a given number of units called "baseline" and absorbed the variations in cost
due to market conditions but now has, in a short period of time, moved toward providing
a fixed dollar amount of funding for both housing assistance payments and
administration. This has placed an immediate funding burden upon this agency and
has stressed our financial reserves.
Background and Analysis
Over-leasing: Over-leasing is a HUD term that means a housing authority has
exceeded its baseline units — i.e. the housing authority is paying housing assistance
payments for more families than its baseline. Previously HUD encouraged maximizing
a housing authority's usage level and temporary over-leasing. There was a system of
protections and reserve levels in place to absorb the costs of temporary overleasing. In
3133 ESTUDILLO STREET•P.O.BOX 2759 i MARTINEZ CALIFORNIA 94553•PHONE (925)957-6000•FAX(925)372-0236
www.contracostahouSing.org
the past two years we have aggressively pursued maximized leasing. As a result over
1500
additional Contra Costa families and seniors now are served by this program. However,
as we have learned, along with many other housing authorities, it is easier to lease-up
than to reduce the size of the program. We had become slightly over-leased due to the
softened rental market (making it easier for voucher families to find suitable rentals on
the open market) and lower than expected attrition (fewer voucher families dropped out
of the program due to tougher economic conditions). For the past nine month, no new
Section 8 vouchers have been issued yet our program was somewhat over-leased.
HUD has made it clear that no housing authority will receive reimbursement for housing
assistance payments or administrative costs for over-leased units.
Replacement vouchers: Exacerbating the over-leasing problem was our pending
application for replacement vouchers in conjunction with the development of De Anza
Gardens Apartments which is now under construction in Bay Point. The Housing
Authority relocated families from the old public housing development that was on the
site under a Disposition Agreement with HUD. We offered Section 8 voucher to
families residing there, along with other relocation benefits, and many took them and
are still using them. HUD recently notified us that they would fund these additional
vouchers but not with full retroactivity, thus reducing the funding needed. The good
news is that the vouchers finally approved add to our baseline.
HUD's Retroactive Cut in Voucher Funding: In a recent notice, HUD issued
guidelines for a retroactive change in the method used to pay housing authorities
voucher housing assistance payments. Costs incurred by housing authorities will now
be reimbursed based on costs in August 2003, not on actual costs. Although an
inflation factor will be added to the calculation, we fear it will be inadequate in this
market. HUD has provided for an appeal process but has not assured that there are
sufficient budgeted funds to make housing authorities whole.
This interpretation by HUD of the legislative FY 2004 Omnibus Appropriations
Conference report is being widely criticized by affordable housing advocates and
members of Congress. In a letter to HUD Secretary Alphonso Jackson, Senator
Barbara Mikulski states she is "shocked" to hear of HUD's ruling. "This is unacceptable.
... 1 support the goal of controlling the casts of the Section 8 program, and of making
sure that HUD does not pay inflated costs for Section 8 vouchers. However, the
Department runs the risk of going to the other extreme; by not providing adequate
funds to public housing authorities, the Department could force families to lose their
vouchers, or concentrate voucher holders in the poorest neighborhoods."
CONCLUSIONS
Our staff is in the process of digesting these changes and has already taken
administrative steps to mitigate some of the financial problems to weather the changes
without having to remove families from the program. We are considering
recommending to you other changes such as decreasing the payment standards for the
program. payment standards are established dollar limits to the amount of subsidy that
a housing authority is obligated to provide on the basis of a family and reducing the
standards would reduce the monthly cost of supporting a voucher. This could result in
more families being concentrated in poor neighborhoods but may be a financial
necessity in order to maintain long-term financial solvency. As this would be policy
change for the Housing Authority of the County of Contra Costa, should we need to
move in that direction, i will bring it before you for your consideration. Further,
budgetary amendments and other policy changes may be needed and will also be
brought to you for your consideration as appropriate.
Attachments:
• Letter from U.S. Senator Barbara A. Mikuiski to HUD Secretary Alphonso
Jackson, April 21, 2004
Letter from Saul N. Ramirez, Jr., Executive Director of the National
Association of Housing and Redevelopment Officials (NAHRO) to HUD
Secretary Alphonso Jackson, April 30, 2004
• L.A. Times article, April 6, 2004: "L.A. Plans to Reduce Rental Aid for the
Poor"
• Washington Post article, April 21, 2004: "Administration Alters Rules for
Rent Aid"
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The Honorable Alphom Jackson
U.S.Department of Housing au}d Urban Development
451 7a`Sfzeet�SW
Washington,DC 20410
Dear Secmtary Jackson:
I was shocked to reed in 21m Washtr, on Past today that the Department u proposing
new,and potentially damaxialz rules frir the Section 8 program. Tho paper rept dIg the
Department will not mww vouchers at payments high anough to keep pace with rent`
This is unacceptable. HUD must take the necessary steps to ensurra that every voucher currently
in use stays in use,
The fiscal yew 2004 VA-HUD appropriations bill provided$17.6 billion,to renew
expo Section S contracts. This amount ount was S 1.4 Trillion above the amount requested by the
Administration to renew expiring vouchers. I fought to appropr ate:these additional tknds so that
no family would lose its housing assistance.
The Dnuesnt must be fiscally responsible and a good steward of the taxpayers'
dollars. I support the gyral of controlling the costs of the Section 8 program,and of making am
that HUD don not pay infiWW dosts for Section 8 vouchers. However,the Department nuns the
risk of going to the odw extreme;by that providing adequate fiunds to public housing authorities
the:Department could force families to lose flair vouchers,our concentrate voucher holders in the
poorest neighborhoods.
The Depa Uumt clearly has the authority tun provide housing authorities with the founds
they need to same all families in the Section 8 ptooram. The Department has$1.4 billion snores
#loop it requested#n its budget request sod wee ss to a central reserve fimd to supplement voucher
payments in the caw of trout hmmsea. In fact,HUD just provided additional finds to
Massachusetts in order to want the loss of vouahe is there. I urge you to take similar steps.
across the country to ensum that no family in America loses its housing assistance.
Since rviy,
,.07, "4", /AO40-
Barbara A.Mikulski
R,aniting Member
Subcommittee on VA.HUD
and Independent Agencies
Lll �lil�„„ National Association of Housing and Redevelopment Officials
630 Eye Street NW,Washington,DC 20001-3736 (202)289-3500
Toll Free(877)866-2476 Fax (202)289-4961
beUng wmm otties together www.nahro.org
April 30, 2004
The Honorable Alphonso Jackson
U.S. Department of Housing and Urban Development
451 Seventh Street SW
Washington, DC 20410-0500
Dear Secretary Jackson,
I am writing to thank your staff for meeting with industry representatives on April 27 to discuss
the renewal of housing choice vouchers and to inform you that we have reviewed your PIH
Notice 2004-7 dated February 22, 2004. NAHRO continues to have significant concerns and
remains opposed to the manner in which the Department's FY 2004 Section 8 renewal policy is
now being carried out. We are particularly concerned that aspects of your current Flexible
Voucher proposal, namely converting the current program from a unit-based to a dollar-based
program,have now become Administration policy.
NAHRO will continue its work with our members to measure the full impact of this policy--a
task complicated by the lack of technical clarity in PIH Notice 2004-7. However,by applying
each agency's FY 2004 Annual Adjustment Factor to their average Housing Assistance Payment
cost as of August 1,2003,our preliminary estimates indicate that a large number of housing
agencies will receive insufficient 12-month renewal funding. Use of project-reserves and HUD's
Central Reserves would reduce the number of low-income families adversely affected.
Nevertheless,thousands of low-income families may be harmed as a result of funding shortfalls.
Although not specifically mentioned in the Notice,HUD's current practices mandate that
housing agencies offset renewal funding shortfalls by their fiscal year end dates rather than
giving them until December 31, 2004. We believe these shortened time frames will compound
the problem and increase the total number of families at-risk by a multiple of approximately six
to one.
We urgently call upon the Department and Congress to postpone the formal
implementation of this policy until such time as the full impact of its effect can be measured
and prudent steps taken to avoid displacement of families. Recognizing however,that many
local housing agencies have either already or shortly will receive their funding allocations for
Section 8 renewals,we call upon you to take the following immediate steps to minimize the
negative impacts of the renewal formula on low-income families.
Give housing agencies until December 31,2004 to offset renewal funding shortfalls
rather than requiring them to offset any shortfall by their 2004 fiscal year end(FYE)
dates(June 30, Sept. 30,Dec. 31 and Mar. 31). This step would provide immediate
relief, allowing many agencies with June 30,2003 FYE dates to avoid Issuing housing
assistance termination notices to offset their funding shortfalls.
• .Ensure that inflation factors are applied to the Aug.Dec. 2003 period as well as calendar
2004. This can be accomplished by applying FY 2003 annual adjustment factors(AAFs)
to cost data collected Aug.—Dec. 2003,then applying FY 2004 AAFs for calendar year
2004. (We believe that continuous application of the applicable inflation factors is
legally required.)
• Where applicable,replenish agencies' one-month project reserves from FY 2003 for
allowable purposes,under the FY 2003 law.
• At the close of each agency's fiscal year,efficiently redistribute any program reserves in
excess of one month to agencies experiencing shortfalls.
• Re-examine lease-up rates based on statutory flexibilities,as is more fully discussed in
the attachment to this letter.
Please see a full explanation of our rationale for these procedures as an attachment to this letter.
We stand ready to work with you to implement these measures. Our goal is to avoid an
unnecessary and tumultuous displacement of families while we seek to resolve our fiscal and
public policy differences on this issue.
In general,NAHRO believes that Congress has provided adequate funding for agencies' 12-
month renewal of all authorized vouchers leased,a one-month project reserve for each agency,
and a Central Reserve, so that Congress's historic commitment to fund the program on a unit-
based actual cost basis can be upheld. We also continue to believe that the Department has the
leeway under applicable law to implement a renewal formula that would more accurately reflect
actual Housing Assistance Payment(HAP)costs than that provided under PIH Notice 2004-7.
Within the confines of the Section 8 Housing Choice Voucher renewal provisions of the FY
2004 omnibus appropriations act(Public Law 108-199),HUD could avert housing assistance
cuts by providing funding based on agencies' actual HAP costs,as reflected in the latest
available data(quarterly data submitted by agencies on HUD form 52681-B).
NAHRO recognizes the need for some restraint in the growth of the Section 8 program's costs.
We do not agree that drastic measures are required in order to achieve this however. This is
particularly so in light of Congressional Budget Office estimates that Section 8 HCV program
costs will be within national inflation levels over the next five years, without such measures.
And in all events,NAHRO advocates preserving the original principles of the program while
controlling cost in a manner that does not disenfranchise low-income families,property owners,
housing agencies, and the communities in which they operate. We therefore will be calling upon
the authorization committees of both houses to take whatever actions may be necessary,
including the possible convening of a Section 8 summit,that would bring the appropriate
stakeholders to the table with members of Congress and the administration to discuss ways in
which the interests and concerns of all parties can be addressed with specific regard to the
renewal of FY 04 contracts. Further,we will urge that results of such a meeting and any
_
hearings held on this subject in the foreseeable future be an essential part of deliberations on this
subject in connection with congressional consideration of the HUD EY 05 appropriations bill and
or other timely measures aimed at ensuring fully funding the renewal current housing choice
vouchers.
In this regard, I want to express my agreement with Deputy Secretary William Russell,who,
during our meeting on April 27,2004,clarified that the connection between the few agencies that
ended their fiscal years annually over-leased and the renewal funding issue at hand. For all
intents and purposes,these issues are distinctly separate. There was a question which Mr.
Russell was uncomfortable addressing on the spot,but which needs to be answered for all
concerned. Namely,what is the exact amount of the budget shortfall HUD forecasts will occur,
if authorized leased vouchers were renewed on the basis of actual HAP costs throughout FY
2004? With nearly$20.2,billion available to the Housing Certificate Fund for obligation in FY
2004, it appears that sufficient funding exists to operate the Section 8 program overall,including
voucher renewals at actual HAP"costs. Those present at the meeting have continuing interest in
the answers to these questions. We urge HUD to provide Congress with the information
necessary to assess the financial status of the Housing Certificate Fund.
In closing,NAHRO believes the Department's current renewal Notice is not in keeping with
responsible reform and does more to create uncertainty and hinder program operations rather
than help the program. The continued success of the voucher program depends on property
owners, investors, developers,housing agencies,and low-income families all having confidence
that vouchers are a reliable means of securing affordable rental housing and homeownership
opportunities.
As always,NAHRO stands ready to assist the Congress and the Department in seeking solutions
that will build a better program. Please feel free to contact me or my staff at 202-289-3500 if you
would like to discuss the recommendations in this letter in further detail.
Sincerely,
Saul N. Ramirez,Jr.
Executive Director
cc: Dep. Sec. Roy Bernardi Asst. Sec. Michael Liu Dep.Asst. Sec.William Russell III
Senator Richard Shelby Senator Kit Bond Representative Barney Frank
Senator Wayne Allard Senator Jack Reed Representative Jim Walsh
Senator Paul Sarbanes Representative Mike Oxley Representative Bob Ney
Attachment A
Give housing agencies until Dec.31,2004 to offset renewal funding shortfalls rather than
requiring them to them offset any shortfall by their 2004 fiscal year enol
HUD's PIH notice did not include mention of the effective date of the FY 2004 HAP renewal
formula. Additionally,HUD did not include whether all affected agencies must offset their
renewal funding shortfalls by their FYE date or whether every agency has until the end of the
2004 calendar year(the program year)to offset their renewal funding shortfalls. However,the
Department's actions with several housing agencies with FYE dates of June 30, 2004 indicate
that they are requiring agencies to offset renewal funding shortfalls by their FYE, not the
program year end.
If HUD intends the effective date of the notice to be January 1, 2004(which is not clearly
stated), it stands to reason that the department should allow all agencies through December 31,
2004 to offset their renewal funding shortfall regardless of their.FYE date. This is a reasonable
request in light of HUD's several month delay in implementing the law and the retroactive
application of renewal funding. While this issue is not addressed in HUD's notice, it will have
major impact on LHAs and the communities they serve. In fact, many agencies are currently
preparing notices terminating Housing Assistance Payment Contracts to be sent today,April 30,
2004, effective July 1,2004.
NAHRO urges the Department to give each agency until December 31, 2004 to offset their
renewal funding shortfalls. This would provide immediate relief, allowing many agencies with
June 30, 2003 FYE dates to avoid issuing housing assistance termination notices to offset their
funding shortfalls.
Ensure that inflation:'factors acre-applied to the Aug.---Dec.2003 period as well as calendar
2004.
According to HUD's documentation to Congress,the Department's current inflation factor
strictly applies each agency's FY 2004 AAF but omits their FY 2003 AAF for the last five
months in 2003. HUD's PIH Notice 2404-7 does not mention whether or not HUD will apply the
AAFs for the last six months of 2003 with each agency's 2003 AAFs,before applying the 2004
AAF for 2004.
In order to provide adequate renewal funding to housing agencies with per unit HAP costs above
HUD's modest FY 2004 AAFs,HUD should provide accurate inflation factors from the time
period in question,Aug. 1 —Dec. 31,2003,to more accurately reflect their actual HAP costs.
These inflation factors were debated during the 1999 negotiated rulemaking on the renewal
formula undertaken by HUD and program stakeholders. Among other recommendations of the
Neg. Reg.Committee mentioned below,the adequacy of agencies' one-month program reserves
was discussed relative to concerns about the adequacy of HUD's AAF inflation factor
methodology. (The Final Report of the Neg Reg Committee can be found at
http://www.hud.- ov/offices/Dib/programs/hcv/nrac/final-committee-m2rt.pdf)
Linder the notice, LHAs may appeal inadequate AAFs but would be limited to cost increases
related to market factors and analysis related to modest housing cost for the area. Therefore,
increased HAP costs resulting in part due to decreasing household incomes or a greater
proportion of larger sized households,or enhanced vouchers leased since Aug. 1,2043,may not
be covered by an agency's AAF appeal.
Also appeals of inadequate AAFs must be filed by July 15,2004 and are subject to
appropriations. Without advance knowledge of how many agencies may file such appeals,it is
difficult to understand the impact on overall funding of renewals the cost of appeals may have.
The appeal process is a poor substitute for a more accurate inflation adjustment described above.
NAHRO strongly recommends that HUD apply FY 2003 AAFs for the last six months of 2003 to
account for inflation for the months from Aug. 1—Dec. 31,2003. HUD's FY 2004 renewal
formula freezes each agency's average Housing Assistance Payment(HAP)level at Aug. 1,
2003. While the statute does not say the inflation factor must be continuously applied,the
intrinsic nature of an inflation factor implies that it should be continuous.We cannot find a case
at HUD or elsewhere in the government where an agency arbitrarily skipped a period in
following a statutory mandate that a cost be inflated. If HUD does not apply the 2003 AAFs for
the last part of 2003, leaving a gap in which no inflation factor is applied to unit costs,agencies'
renewal funding levels will be further compromised.
As you know,under existing regulations,housing agencies are required to update their utility
allowance schedules annually. Many agencies updated their utility allowance schedules resulting
in increased utility amounts between five to six percent of their annual Housing Assistance
Payment levels. In many instances the rate of utility allowance increase alone exceeds the
Annual Adjustment Factor amounts. Nevertheless,HUD has created an inflation adjustment
appeal process instead of implementing a continuous inflation adjustment system based on both
FY 2003 and FY 2004 AAFs for the applicable time periods,to better accommodate agencies
whose utility allowance schedules increased.
Where applicable,replenish agencies' one-month project reserves from FY 2003 for
allowable purposes,under the FY 2003 law
The FY 2003 omnibus appropriations law regarding replenishing agencies' one-month project-
reserves,did not require agencies to request replenishment of those reserves. Instead,the bill
compelled HUD (i.e. "shall"not"may")to replenish it within 30 days,when 50 percent of
reserves was spent for allowable purposes. It is worth noting that last year replenishment could
be made both for increased HAP costs and increased authorized leased units.
The FY 2003 Omnibus Appropriations law provided$391.9 million in a central reserve fund to
be administered by HUD for amendments to Section 8 Annual Contribution Contracts,within
FFY 2003 (through December 31,2003). The central reserve fund was to be used to replenish
housing agencies' one-month project reserves within 30 days of their spending at least 50 percent
of it for either significant increases in per unit costs for vouchers or for costs associated with
increases in the number of vouchers under lease as compared to the number of vouchers under
lease at the time of the LHA's contract. Funds from LHAs' 12-month budget authority,one-
month project reserve,and central fund reserve,can all be used to fund vouchers up to agencies'
adjusted baseline ACC units(i.e. 100 percent of their contracted vouchers). Once the above
requirements are satisfied, HUD was required to replenish LHA's one-month project reserves
within 30 days of their request. LHAs' one-month project reserves were supposed to be
replenished within each LHAs' fiscal year. NAHRO has received many reports from housing
agencies that their one-month project reserves,which were spent for allowable purposes,were
not replenished while others that did not need to use their one-month project reserves have no
reserves as of December 2003 without explanation from HUD.
Efficiently redistribute any program reserves in excess of one month to agencies
experiencing shortfalls
The FY 2003 Omnibus Appropriations Act provided$391.9 million for a central reserve fiend to
be administered by HUD for amendments to Section 8 Annual Contribution Contracts,within
FFY 2003 (through Dec. 31, 2003). HUD is required to replenish an LHA's one-month project
reserves within 30 days of their request and within the agency's fiscal year.
NAHRO believes that addressing this administrative problem is an important part of minimizing
this unnecessary renewal funding allocation problem.Nationally there are adequate one-month
program reserves that are not currently distributed among agencies such that agencies have
access to one month of their annual HAP funding levels. As a result,hundreds of agencies that
were not annually over-leased in FY 2003 are operating in FY 2004 with much less than one-
month project reserves while others have none,and still other agencies are funded at amounts in
excess of what they need. It is important to note that quarterly assessment and redistribution of
the one-month reserves must be performed at agencies' fiscal year end and in the least disruptive
manner possible. Quarterly redistribution should accomplish the goal of leaving each agency
with an adequate one-month project-reserve while at the same time providing other agencies
with HAP renewal funding for needs above their Aug. 1,2003 level adjusted by inflation,with
adequate 1-month project-reserves as well.
A type of quarterly redistribution of unspent funding was recommended by the Negotiated
Rulemaking Committee in 1999. To date,the department has not implemented a quarterly
redistribution of unspent funding.
Re-examining lease-up rates based on statutory flexibilities.
HUD's current method of calculating lease-up rates may be contributing to a gross classification
of agencies as over-leased when in fact they are not. This practice may also be artificially
limiting the amount of financial resources available to these agencies.Therefore,HUD's re-
evaluation of its lease-up rate calculations should also be part of the solution to the FY 2004
renewal funding problem.
In order to take advantage of this option,HUD would need to revise its current interpretation of
lease-up provisions of the Quality Housing and Work Responsibility Act of 1998(QHWRA)
statute. NAHRO believes that HUD has the existing statutory authority under QHWRA to
accurately restate LHAs'voucher lease-up rates and corresponding budget authority.
Revising this interpretation would be one important measure to help remedy the financial
exposure of some agencies that received incremental vouchers.HUD's recently released study,
"Costs and Utilization in the Housing Choice Voucher Program," found that the current
calculation of incremental vouchers relative to each agency's FYE date has resulted in voucher
lease-up rates that vary greatly. The study found that agencies which had more time between
incremental voucher awards and their FYE date were less likely to be over-represented in their
lease-up rates,and agencies that had less time between incremental voucher awards and their
FYE date were more likely to be over-represented.HUD's study provides an indication of the
problems created by HUD's current lease-up calculation method.
HUD currently excludes all incremental vouchers awarded and leased by LHAs from the
denominator of their lease-up calculation until each voucher has been under HAP contract for 12
months or more. However,HUD does not exclude the portion of incremental vouchers brought
under lease by LHAs from the numerator of this equation. This"apples to oranges"comparison
results in some LHAs'voucher lease-up rates exceeding 100 percent, when in fact they have not
leased more than their authorized adjusted baseline number of vouchers(baseline vouchers plus
incremental vouchers).
By overstating the extent of over-leasing,HUD's current voucher lease-up calculation
exaggerates the depth of agencies' fiscal problems,potentially increasing the number of property
owners whose HAP contracts may be terminated on behalf of low-income families. In addition,
it can have the effect of preventing these agencies from accessing program reserves and Central
Reserve to support unit months under lease that are actually in excess of their annual authorized
level. Correcting this miscalculation would make needed funding available to agencies
erroneously considered annually over-leased.
os�Angeles Times: L.A. Plans to Reduce Rental Aid for the poor Pagel of 3
KI MOM'.
http://www.latimes.com/news/local/la-me-rents6aprO6,1,5006022.story
L.A. Plans to Reduce Rental Aid for the Poor
By Jocelyn Y. Stewart
Times Staff Writer
April 6, 2004
More than 44,000 low-income families in Los Angeles whose rent is subsidized by a federal program
will be forced to rent cheaper units and contribute more of their monthly income to housing costs under
changes proposed by HUD and recently approved by the city housing authority's board of
commissioners.
The measure,which is part of an effort to address funding problems that have threatened the Section 8
program, decreases the monthly subsidy the program makes to house poor families.
Section 8 families that are planning to move will be affected immediately, subsidies will be lowered for
all participants within the next two years,housing officials said.
In Los Angeles, about 95,000 people live in subsidized houses or apartments. Advocates and tenants
worry that lower subsidies will make it tougher for families to find a place to rent—and harder to make
ends meet each month.
"That means I don't get to have lights, gas and a phone," said Delilah Bowen, a former social worker
who is disabled and lives on welfare.
The change is just one of many underway at the Housing Authority of the City of Los Angeles.
On Monday, the Housing Authority's board approved a memorandum of understanding with the
Department of Housing and Urban Development that calls for the federal agency to play a greater role in
its affairs.
The agreement calls for several changes, including the appointment of a new director of Section 8. Steve
Renahan, the current director and a 20-year veteran of the agency, is expected to remain with the
Housing Authority but not as the director.
At a meeting last week, Ftenahan told the agency's board that the decrease in monthly subsidies and
other changes were recommended by HUD officials as something "we should do promptly to reduce
costs."
The actions are in response to funding problems with Section 8. Under the program,participants pay
about 30%of their income toward rent and the federal government pays the rest.
In February, the housing authority suspended the vouchers of 1,500 participants, citing a lack of funds.
An additional 5,000 families in subsidized housing could have had their rental contracts canceled.
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Los Angeles Times: L.A. Plans to Reduce Rental Aid for the Poor Page 2 of 3
Local housing officials sought ways to reduce costs without displacing families,Renahan said.
"We want to try to find the balance between these two objectives," he told the board.
The decision to lower monthly payments is a significant, and some say troubling, move in a high-rent
market like Los Angeles.
In past years,tenants with housing vouchers struggled to find landlords willing to accept the vouchers at
a time when much higher rents could be charged on the open market.
The agency launched an aggressive outreach program to property owners and increased rent subsidies to
mirror rents on the open market. As a result,more families found housing and poor families rented
higher-quality units in neighborhoods with less crime and poverty, according to an authority report.
Because of budget constraints,that strategy is no longer viable. Families will be notified of the proposed
decrease in payments at their next annual review. The decrease would go into effect the following year,
officials said.
For a family renting a two-bedroom apartment, for example, the subsidy would decrease from $1,204
each month to $1,005.
For a family renting a three-bedroom apartment, the subsidy would decrease from$1,625 to $1,276.
Tenants who already pay about 30%of their income would be forced to move or cover a greater portion
of the rent,provided the total amount they paid did not exceed 40% of their income.
But many tenants may be unable to pay that much. To participate in Section 8, tenants must be
designated under federal guidelines as either"very low income" or"extremely low income."
In Los Angeles, a family of four, for example,with an income of$29,750 or less is considered very low
income, according to HUD. A family of four with an income of$17,850 or less is considered extremely
low income.
"This will make it more difficult for tenants to find landlords who will accept Section 8," said Larry
Gross of the Coalition for Economic Survival,which organizes tenants of public housing. "It will force
Section 8 tenants into a smaller area,helping to ghettoize Section 8 tenants."
Bowen, the former social worker, is already experiencing difficulty because her subsidy has been
reduced. Bowen originally received a voucher that allowed her to rent a two-bedroom apartment for up
to $1,250 a month.
"I was very fortunate to find [an] apartment," Bowen said. "I did everything they asked me to do. I
completed all of the paperwork." But last week, housing authority staff informed her that the agency
would pay only$1,125 for a comparable apartment in Pacoima, which is a i 0-minute walk from her
current one in Lake View Terrace.
"Because they haven't accepted the voucher, I'm trying to come up with the extra money to cover the
voucher," said Bowen,whose arthritis and degenerative joint disease forced her onto disability, then
welfare,
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Los Angeles Times: L.A. Plans to Reduce Rental Aid for the Poor Page 3 of 3
She and her 13-year-old son live on a monthly$511 welfare check while her application for Social
Security is being processed. So far, she has not found the money to move to the new apartment,but has
told the current owner she would move by Friday.
"I'm walking by faith, and I mean that," she said.
Irene Molina, 75, has already experienced her share of stress. City officials and owners of the apartment
she lives in wrangled over the Section 8 program. The owners, who had sought to remove the building
from the program, last year agreed to accept vouchers from Molina and other tenants. Now she has new
problems to anticipate.
"It's a real big concern for her,because she is on Social Security," said Molina's daughter, Patricia. "She
gets very little income as it is."
Paying more rent would be tough, "but if she would have to move, it would be devastating," said
Patricia Molina,whose mother has lived in her apartment for 30 years.
Arnie Corlin, a property owner who sits on the board of directors for the Apartment Assn. of Greater
Los Angeles, criticized both the decision to lower rent subsidies and what he called the inefficiencies of
the Housing Authority. Lowered subsidies might push away owners, said Corlin.
"I don't feel it's fair to the tenants," Corlin said. "I also don't think it's fair to the owners."
In other action,the authority's board last week imposed a minimum rent of$50,which will affect about
540 tenants who pay less than$50 each month because their incomes are extremely low.
The board also voted to limit the annual increase to 3% for owners who rent to Section 8 tenants and
whose buildings are under rent control.
Linda Williams, a housing advocate with the Legal Aid Foundation of Los Angeles, said the changes
will hit especially hard because of the city's housing shortage.
"The quick fix they are trying to implement is on the backs of individuals who can't afford it: the elderly,
the disabled, single moms with kids," she said.
If you want other stories on this topic,search the Archives at latimes.com/archives.
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washingtonpost.com:Administration Alters Rules for Rent Aid Page 1 of 2
was1109t{onOOat&M T A M 9 TISI 16
,
Administration Alters Rules for Rent .Aid
Housing.Advocates Criticize Section 8 Changes
By Amy Goldstein.
Washington Past Staff writer
Wednesday,April 21,2004;Page A21
The Bush administration is changing the nation's largest program of housing
assistance so that,for the first time,the government no longer is promising to
pay the full cost of rent vouchers that help nearly 2 million poor families.
The Department of Housing and Urban Development is putting into place the
new payment method for the program,a cornerstone of federal housing policy
known as Section 8,before Congress decides whether to endorse a broader
proposal by the administration that would eliminate many longtime federal
rules governing which people get rent assistance and how much they must
pay.
The payment change,which is infuriating congressional Democrats and
advocates for affordable housing,is essentially a different route for the
administration to accomplish a central goal of its larger proposal.to contrails
rapid growth in the program's spending.
Section 8 is a form of housing assistance that was created three decades ago
and traditionally has been more papular among Republicans than the nation's
network of public housing,because it relies on the private market.The
program allows poor families,disabled people and the elderly to obtain a resit
voucher-- 1.9 million are available this year- from a local housing authority
and take it to any private landlord in the community who is willing to accept
it.
Until now,the government has allotted each of the nation's 2,500 participating
housing authorities a specific number of vouchers each year,set rent limits for
every community and then reimbursed their costs.Under the new method,HUD pays each housing
authority based on its costs last August,adjusted by an inflation formula.That formula is not guaranteed
to Deep pace with rent increases.
The method is so new that HUD has not formally notified housing authorities in writing,although
federal officials have made it retroactive to January and have begun to tally about it with local agencies.
HUD officials said they do not yet know how much money will be saved,although they said the
program would run out of money for the year too soon if they did not make the switch.
Michael Liu,HUD's assistant secretary for public and Indian housing,said in an interview that,in
changing the rules,the agency was following directions set forth in a few sentences in the fiscal 2004
appropriation that Congress finished two months ago,which gives 516.4 billion for Section 8. "We
intend to implement the law,"Liu said.
But the leaders of advocacy groups representing local Housing officials and low-income tenants say that
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washingtonpost.com:Administration Alters Rules for Rent Aid Page 2 of 2
the language in the budget is ambiguous and that President Hush's housing advisers are misinterpreting it
to justify changes they want.
Jonathan Zimmerman,a housing policy analyst for the National Association of Housing and
Redevelopment officials,said the organization's analysis suggests that at least 900 local housing
authorities,spanning virtually every state,will end up this year with less money than they need to cover
their vouchers'cost.
Sandra Henriquez,administrator of the Boston Housing Authority,said she learned from HUD a few
weeks ago that federal payments suddenly were$1.2 million less than herr agency needs to pay for its
11,000 vouchers.And because of other financial changes in the program that the Bush administration
has made,her agency has used up the money it had in reserve.
"We're all just hoping HUD will come to its senses,"Henriquez said.For the moment,she said,her
agency will be unable to afford some of the vouchers it has been allotted.Her choice,she said,boils
down to whether to deny vouchers to some of the poorest families in the program,who require the most
government assistance with their rent,or to a larger number of participants with slightly higher incomes
who can pay more of their own rent.
Massachusetts GOP Gov.Mitt Romney has sent HUD a letter of complaint,as have many of that state's
congressional Democrats.
William P.Murphy,who directs the rental assistance division in Montgomery County's Housing
Opportunity Commission,said he,too,believes he would be unable to afford all of his agency's rent
vouchers.
Liu said HUD will consider giving housing authorities extra money if they can prove a hardship.Still,
he said,low-income housing advocates who want to reverse the change"would put the program in an
automatic deep hale."
0 2004 The Washington post Company
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