July 2004

Planning

Copyright by American Planning Association

U.S. Attacks Spiraling Section 8 Housing Costs

By James Andrews

Faced with the escalating cost of the Section 8 housing subsidy program, the federal government proposes to restructure the program next year and fund it for the rest of this year at the August 2003 level.

Under Section 8 — now the Housing Choice Voucher Program — low-income renters pay no more than 30 percent of their income toward rent. The federal government pays the rest, which is guaranteed by vouchers issued through a local housing authority. The voucher program serves about two million households.

Fewer than half of the 2,500 public housing authorities in the program will experience any change under the proposed 2004 payment plan, Housing and Urban Development Department officials said when the ruling was announced in April.

But housing officials around the country contend they will be unable to pay for vouchers already issued. The National Low Income Housing Coalition says the shortfalls in local authority budgets will mean termination of thousands of vouchers, forcing families and children out of their homes. In addition, the coalition says HUD's refusal to pay many housing authorities their overdue reserves leaves them without resources to cover the expected shortfalls.

The coalition contends that Congress added money to the voucher program this year specifically to fund fully all vouchers in use, but HUD says the new rule is designed to comply with a provision in HUD's 2004 appropriation, signed in January.

The law instructs HUD to fund housing authorities at levels that more closely reflect actual funding needs and local rental market changes, says a HUD statement. For 2004, the department says, this means paying housing vouchers based on the unit cost on August 1, 2003, with additional adjustments for inflation.

President Bush's budget for next year, sent to Congress in February, calls for substantial reductions in Section 8 spending. If adopted, the National Association of Housing and Redevelopment Officials estimates that the voucher program would receive $1.9 billion less in fiscal 2005 and more than $4 billion less in 2009 than in 2004. The Housing Coalition says the budget would reduce the number of families that can receive assistance by 250,000.

Block grants proposed

HUD wants to get away from paying by the unit, pointing out that in the last two years alone, the average cost for each voucher has jumped 23 percent.

The 2005 budget proposes turning the voucher program, which is based on the rental market, into a block grant program administered by local housing authorities. This "sweeping reform," says HUD, "is designed to help public housing authorities enable more low-income families to transition to self-sufficiency while reducing the number of families on long waiting lists." The result, local officials claim, is that they would be saddled with the problem, but without the financial resources to deal with it.

In addition, the present program targets voucher assistance in categories so that it is available to the most needy. Low-income housing advocates fear that authorities will allot the money differently in order to serve more people, with the lowest income households losing out.

Funding for this year is the immediate problem. The head of the St. Louis County Housing Authority estimates his agency will lose between $500,000 and $1 million, the St. Louis Post-Dispatch reports. To cover the loss, HUD suggests that the authority double a tenant's minimum monthly rent from $25 to $50, give out fewer vouchers, or pay less, the paper says.

The Ohio Housing Authority Conference estimates that 71 percent of the state's 79 authorities could suffer shortfalls averaging about $15 per rental unit, the Cleveland Plain Dealer reports. HUD would pay the Cuyahoga Metropolitan Housing Authority $537 per unit, although it now spends $552, the paper says. Officials of the Columbus Metropolitan Housing Authority project a shortfall this year of about $2 million.

The fate of both proposals is likely to be decided in the congressional appropriations process.