HUD Pulls a Disappearing Act on Federal Housing Funds

by Lynda Carson

"Of all the knives that HUD has put in New York City's back, this is the longest and deepest. I've never seen anything like this in the magnitude of the cut and the sneaky way in which it was delivered."-- Sen. Charles Schumer

Shock waves are reverberating across the nation from the Bush administration's recent proposal to defund federal housing programs that house more than five million low-income households. An estimated three million households live in public housing with two million more receiving Section 8.

Public housing authorities all over the country are reeling from the latest funding proposals that will make it nearly impossible for many of them to pay their staff or properly maintain and operate their stock of public housing.

Housing and Urban Development (HUD) officials have submitted a new proposal that would cause a huge funding loss for much of the public housing sector. The Bush administration's budget includes some of the largest funding cuts ever proposed since Congress first started subsidizing housing for low-income renters.

The Council of Large Public Housing Authorities (CLPHA) accused HUD of reneging on a recently negotiated agreement to fund public housing. In a press release, the CLPHA slammed HUD for double-crossing the nation's public housing authorities (PHAs) with an out-of-the-blue proposal that would leave housing programs for the poor severely underfunded.

The CLPHA declared: "The proposed public housing operating fund rule now being reviewed on Capitol Hill substantially alters an agreement carefully negotiated between HUD and the public housing community last year - leaving the agreement gutted and the proposed rule unworkable."

A broad coalition of nearly all the nation's public housing authority officials and redevelopment agencies demanded that the Bush administration publicly reveal its previously negotiated deal with the PHAs so that everyone could see how badly this agreement had been betrayed.

"The Council of Large Public Housing Authorities (CLPHA), National Association of Housing and Redevelopment Officials (NAHRO), and Public Housing Authorities Directors Association (PHADA), call on the administration to publish the rule that was negotiated and agreed to by the negotiated rulemaking committee mandated by Congress on which we served."

If the Bush administration's proposed funding cuts take hold, 14 percent, or nearly $480 million, will be slashed from HUD's $3.4 billion budget to fund the nation's 3,100 public housing authorities.

Some of the affected housing agencies already predict that the funding loss will impede their ability to maintain basic services for many of the three million low-income households in public housing.

This spells disaster for the day-to-day operations of the troubled agencies, which are already short of the funding needed to properly maintain and insure their properties, pay their staff and labor, and cover the ever-increasing utility bills.

Tim Jones, director of housing management for the Oakland Housing Authority (OHA), told Street Spirit, "We have some legitimate concerns, and are hanging in there as best as we can; but at some time ahead we will reach a breaking point if the funding cutbacks continue. It seems as though they are trying to bleed us and force us out of the housing programs that assist the poor. Even the local nonprofit housing organizations cannot offer housing assistance to the poor, at the level that we do.

"You cannot continue to run these types of housing programs for the poor when the annual allowable expense levels are only being funded at 89 percent of what the operating subsidy should be providing, in accordance to what we are entitled to. We are not asking for more than what we are entitled to; but at the least, we need what we are entitled to, so that we may maintain our responsibility to those we serve."

Jones said the proposed funding cuts will force some hard decisions on the Oakland Housing Authority.

"The Oakland Housing Authority has over 300 staff, and the funding cuts will require us to make some tough choices," he said. "It will take some creative measures to keep the same number of housing units available, and our modernization program will have to be placed on the back burner for now.

"Currently the vacancy rates for public housing units in Oakland are around 2.5 percent; and with the funding losses occurring nationally, it may affect how fast the vacancies may be filled, because it will be difficult to maintain the labor force needed to properly maintain the units."

As an indication of the depth of poverty among those needing housing assistance, the average family in Oakland that participates in the Section 8 program only earns around 19 percent of the area median income. Last year, 83 percent of the new families joining the Section 8 program earned less than 30 percent of the area median income.

The San Francisco Housing Authority already claims to be on the brink of bankruptcy; and this latest round of proposed funding cuts may spell doom for many of the nation's housing agencies that have already deferred maintenance repairs for months at a time or lack the money to repair roof leaks at their properties. Some agencies may even be forced to sell their properties to remain afloat.

During the week of April 7, Sen. Hillary Clinton (D-NY) and Sen. Charles Schumer (D-NY) blasted HUD Secretary Alphonso Jackson for double-crossing the nation's housing agencies on a deal that was agreed upon last June that would have avoided the worst of the cost-cutting proposals HUD is currently seeking.

"Of all the knives that HUD has put in New York City's back, this is the longest and deepest," said Sen. Schumer. "I've never seen anything like this in the magnitude of the cut and the sneaky way in which it was delivered."

New York would face more budget cuts to public housing than any other state in the union, a total of $185 million in cuts projected during the next five years. Sen. Clinton recently sent a critical letter to HUD Secretary Jackson as an angry response to HUD's reneging on the deal to fund the nation's housing agencies.

During the past few years, the Bush administration has pushed for a new formula that would change the way the PHAs are funded, and shift billions of dollars from the older urban areas of the Midwest and Northeast, to the rural and southern regions of the country. Some housing advocates believe the Bush administration is promoting a political payback scheme in housing dollars to areas of the country that supported Bush's election.

Last June, a compromise was made to keep the worst of the funding cuts from occurring in most of the PHAs. But that agreement was broken by HUD officials in March 2005.

Last month, according to housing advocates, HUD officials started circulating a proposal to Congressional members that differed greatly from the agreement made last June; the new proposal contained far deeper funding cuts than what was already agreed upon.

During negotiations last June, a formula was agreed upon that would provide more money for two-thirds of the nation's public housing authorities. At worst, one-third of the housing agencies might have received funding cuts, capped at a five percent level of their budgets.

HUD's latest proposal to the double-crossed housing agencies removed the five percent cap on funding cuts and eliminated other measures meant to minimize further funding losses.

Oakland Housing Authority Executive Director Jon Gresly commented that it all seems very confusing. Gresly said, "I received an e-mail lately from Michael Liu, HUD's assistant secretary for public and Indian housing, stating that we would receive a funding increase of 3.6 percent, but that we would only receive 20 percent of the 3.6 percent increase during the next fiscal year. At the same time, our analysts are telling us that under the current funding formula, we should be receiving an increase of 5.5 percent in our budget for the next fiscal year starting in June."

Jon Gresly, who has worked as an OHA official for 27 years and has been its executive director for the past six years, said that changes happen so fast in HUD that it is hard to predict what will occur even a few months from now.

"It's hard to tell what the funding losses will do in the future, because we can barely plan ahead for six months at a time anymore," Gresly said. "We were not hit as hard with funding losses as many of the other housing agencies around the country, and in the near term we don't seem to be negatively affected. Under the current HUD funding formula, we are entitled to $10,858,000 a year to fund our programs, but we only receive around 89 percent of what we are entitled to, and this is what concerns us."

Gresly expressed alarm over HUD's recent cuts. "We should be alarmed by the funding losses taking place during the past year," he said. "On the Section 8 program alone, we spend around 11 million dollars per month; and that program is around seven times larger than our public housing program. The cuts are making us look at ways to make up the difference, such as putting a cap on the value of the Section 8 vouchers or limiting the portability of the vouchers with other housing agencies.

"We may have to ask tenants to pay more than they do presently, and we're not sure if asking the landlords to accept less money for their units is a good idea. Term limits on the vouchers do not seem to be very promising, because we may end up losing existing tenants in the program for new ones that actually need more of a subsidy. All of these options will have to be looked into if the funding losses continue."

Gresly said that HUD is not asking for enough funding from Congress, and the impact could be two-fold: Low-income tenants may have to pay more in housing costs or the Section 8 program could be reduced, an especially alarming prospect in California, with the largest Section 8 program in the United States.

"I don't have confidence in the current funding process for the housing assistance programs. HUD has not been requesting enough funding from Congress to maintain the current funding levels for what we are entitled to," said Gresly. "California has the largest Section 8 program in the country, and funding losses affect us greatly here."

He added, "Recently, one of the first housing authorities in the country has broken its ties with HUD and it took around three years for them to do so. Michael Liu of HUD declared this to be a success story because they no longer have to abide by federal rules, and he claimed that this is the beginning of the future for the nation's housing authorities. This means that the housing authority no longer is being subsidized by the federal government and the tenants being served are now paying more in housing costs to make up the difference."

In comparison to what was originally negotiated with public housing authorities around the country, HUD's current proposal contains severe reductions. HUD's new deal for New York City is 15.8 percent less than what was agreed upon last June. In Washington, D.C., HUD's new deal is 19.5 percent less than agreed upon. In Oakland, it is 12.3 percent less; and in San Francisco, HUD's new deal is 11.3 percent less than agreed to last June.

Housing advocates are urging all who are concerned about funding cuts in public housing to contact their Congressional representatives to insist that housing assistance programs be fully funded. Call the Toll Free number: 1/888/818-6641.

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