By this fall, according to activists, the city could lose over 10 percent of the remaining 90,000 affordable housing units that exist under the federal Section 8 program if Congress doesn’t plug a $2.4 billion budget shortfall at the Department of Housing and Urban Development.
A pair of U.S. representatives, Nydia Velazquez of Brooklyn and Queens and Jerrold Nadler of Brooklyn and Manhattan, are holding a rally tonight to pressure Congress to approve supplemental funding so HUD can continue to guarantee owners of Section 8 buildings rents to match the market. Without such gurantees, there’s a risk of apartments leaving Section 8 for the increasingly expensive open market.
“If owners can’t rely on the subsidy then they will opt out of the Section 8 program,” Patrick Coleman of the group Tenants and Neighbors, one of the rally’s organizers, said. The rally’s at 6:30 at Judson Memorial Church on Washington Square South.
The problem surfaced in July, when HUD’s monthly payments to landlords with project-based Section 8 contracts became spotty, causing owners to cut-back on maintenance and tenant services, the rally’s organizers said.
At first, HUD said administrative problems were behind the late payments, according to Mr. Coleman said. The rally’s organizers blame the Bush administration for securing only $6.1 billion of the estimated $8.1 billion needed to operate project-based Section 8 this year. HUD is not only scaling back allocations to buildings, but now they are only guaranteeing funding through Sept. 30, Mr. Coleman. Though $7.1 billion has already been allocated for the 2009 fiscal year, there is still the matter of the $2.4 billion deficit that HUD will accumulate in 2008 if no additional money is secured.
“The problem is what will come on Oct. 1,” said Mr. Coleman. “This is unprecedented so we don’t know what’s going to happen in the next fiscal year. They’re saying ‘we’ll hobble along until Sept. 30 and then get more money,’ but Congress has never approved a HUD spending bill on time so they are not going to have enough to renew building contracts.”
Even if Congress approved supplemental funding on Oct. 1, renewing all the contracts at once would be a huge administrative burden for HUD employees, who usually stretch negotiations out over the course of a year.
The Housing Conservation Department represents tenants during negotiations between HUD and landlords with project-based Section 8 contracts. John Raskin, the agency’s coordinator in Hell’s Kitchen, is involved in negotiations between HUD and five landlords over the market value of their units.
“When they believe they won’t be funded it’s much more difficult,” Mr. Raskin said. “Five years ago, everyone jumped at a 20-year contract. Now they want [shorter ones] and we have to do a lot of work to convince Hells Kitchen landlords that it’s in their interest to stay in the program.”
In areas where rents have sky-rocketed over the past decade like Hells Kitchen, the funding issue is only partially behind landlords’ desire to convert affordable housing to market-rate units. For them, sporadic subsidy payments may prove to be the final straw. The owner of the Hudson View I building in Harlem that houses 93 low-income families is one landlord considering converting the building to market-rate due to insecure funding.
In less desirable neighborhoods, Section 8 building owners are less likely to opt out of their subsidy contract because it provides a steady source of revenue, but HUD’s budget shortfall is nevertheless taking its toll.
A press release about the rally issued today quotes Yvonne Graham, a tenant at Morris Heights Mews in the Bronx, saying her manager attributed the deteriorating conditions to late payments from HUD: “Management could only afford to pay 1 porter to clean 3 buildings – tenants were mopping the hallway floors in front of their own apartments. We went without a security guard for months.”
Mr. Nadler said in a statement that the program has been under funded for years, but is “arguably this nation’s most successful, large-scale, public-private partnership to provide safe, decent and affordable housing for low-income and working Americans, seniors and the disabled.
“The Bush Administration, instead of asking for the proper level of funding, has only guaranteed short-term payments to landlords, which may ultimately result in the permanent loss of these precious units of affordable housing. I reject that approach, and back efforts to provide support for important programs like project-based Section 8 funding.”
The success of project-based Section 8 is not disputed—especially when compared to programs like Mitchell Lama where landlords have no incentive to renew. Congress has not approved a new project-based Section 8 housing contract since 1983 and no other housing program provides rents that are really affordable to low-income tenants, said Mr. Raskin, the Housing Conservation Department coordinator.
But it seems unlikely that all of the Section 8 buildings in Manhattan will disappear in the next year. HUD communications officer Adam Glantz said there are 850 multi-family developments that receive HUD subsidies or some form of assistance. Since they began tracking project-based Section 8 housing in 1999, only 50 developments have abandoned the program. The average length of a contract is five years, and the owner has to notify the tenants and federal government a year in advance to opt out.
Mr. Glantz said he did not “know what they are talking about” regarding the $2.4 billion budget gap.
“I have not seen any sort of trend of buildings opting out of program,” he said. “In fact we’ve been very successful using HUD’s tools to keep landlords in the program.”