[Hpn] Northeast Loses in Reshuffling of Housing Aid

William Charles Tinker wtinker@metrocast.net
Mon, 30 Aug 2004 12:21:52 -0400

From: Chris Collier  chriscollier@adelphia.net

Northeast Loses in Reshuffling of Housing Aid

By DAVID W. CHEN   New York Times   August 30, 2004

The Bush administration is replacing the nation's three-decade-old financing
system for public housing with a new formula that will redistribute billions
of dollars, chiefly from New York and other big, urban areas in the
Northeast and Midwest to small, rural places in the South.
The plans represent one of the most far-reaching changes in housing policy
in decades, and the Department of Housing and Urban Development is still
working out many of the details. But already, housing authorities in the
Northeast, including New York City, Baltimore and upstate New York, are
talking about the need to lay off security guards, close day care programs
or charge tenants for snow removal, air-conditioning and other services.
Agencies in the South and the West, meanwhile, say they may finally be able
to pay for their public housing maintenance needs.
Set to take effect in 2006, the new formula stems from the Quality Housing
and Work Responsibility Act of 1998 that was sponsored by former
Representative Rick A. Lazio, Republican of Long Island, and signed by
President Clinton. It mandated a new way of calculating the federal
government's $3.6 billion annual budget for day-to-day housing operations,
such as labor, maintenance, insurance and utilities.
The existing formula, which dates to 1975, essentially allows established
agencies to receive lump-sum payments to run public housing projects with
minimal documentation. The new formula for calculating federal subsidies is
based on the actual expenses incurred by a housing agency, and it is twinned
with a new carrot-and-stick philosophy requiring all agencies to meet new
performance standards.
Smaller housing authorities, especially in the South, have long complained
that the old formula favors older housing authorities by paying them more
than their actual expenses, while ignoring the growing costs of new
agencies. A study by Harvard University last summer echoed those concerns,
and recommended that the subsidy be reformulated to reflect housing costs
In theory, at least, many agencies and housing groups welcome the overhaul
as a fairer formula. But the reality of slicing up the subsidy pie has
provoked visceral reactions among winning and losing housing authorities
similar to those in voter redistricting: it all depends on whether they get
more or less than they did before.
About four-fifths of the nation's 3,100 or so public housing agencies are
expected to gain money over the next two years, according to preliminary HUD
data analyzed by the National Association of Housing and Redevelopment
Officials. Dallas is scheduled to receive an extra $7.6 million, or a 70
percent increase. Hundreds of small agencies in the South, led by Texas and
Florida, are poised to gain at least 50 percent.
"It's unbelievable - I've got a smile on my face," said Kevin Cregan,
executive director of the Broward County Housing Authority in Florida, when
told by a reporter of a projected increase for his agency of 144 percent
from about $700,000 to $1.8 million. He hopes to use the money to hire badly
needed maintenance workers.
But anticipated losers say the new formula is flawed and too draconian. The
New York City Housing Authority says it could lose at least $35 million from
its current subsidy of $759 million, a 5 percent decrease. Meanwhile, a
necklace of struggling upstate cities, like Syracuse, Rochester and Niagara
Falls, could lose more than a third of theirs.
"When this industry was started in the 30's and 40's, it was never thought
to be that you had to make money - it was all about finding people a decent
place to live," said Frederick R. Murphy, executive director of the Syracuse
Housing Authority. Faced with a cut of 34 percent, he may seek higher
insurance contributions from union employees, among other actions.
While the Bush administration did not initiate the push for a new formula,
the result does comport with its broader goal of relying more on
private-sector practices to revamp traditional housing policies.
The most publicized housing battle this year has involved the
administration's proposal this year to loosen the eligibility rules for the
$14.4 billion Section 8 voucher program, the government's primary effort to
help the poorest Americans find and pay for their own housing. The change
could mean that families with higher incomes could receive vouchers, leaving
those with lower incomes to fight for a smaller share of the pie.
The debate over operating subsidies, by contrast, has been confined to a
small group of public housing officials, beginning when Congress directed
HUD in 1998 to determine a new formula for operating subsidies. A year
later, after some reluctance on the department's part, Congress directed the
department to hire the Harvard University Graduate School of Design to
conduct the study, called the Public Housing Operating Cost Study.
Directed by Gregory A. Byrne, former director of the Miami-Dade County
Housing Authority, and James G. Stockard Jr., director of the school's Loeb
Fellowship Program, the study recommended that HUD stop delivering a
lump-sum subsidy to each authority. Instead, it advocated decentralized
budgeting and management practices used in the private real estate industry.
The study, commonly referred to as the Harvard cost study, also calculated
each agency's projected new subsidy, using as a benchmark the cost of
running private properties subsidized by HUD and insured by the Federal
Housing Administration.
Despite criticism from some agencies that the F.H.A. data was a poor
parallel for public housing, HUD accepted the findings, then invited a
couple of dozen housing authorities to massage the specifics. Those
negotiations concluded in June, and the final details should be released
"We believe it's a significant improvement over what we have currently,"
said Michael Liu, the department's assistant secretary for public and Indian
There are some clear winners. All but 12 of Texas' 353 housing authorities
are slated for increases, for a statewide increase of $54.1 million, or 47
percent. In Florida, all but three of 81 housing authorities are projected
to gain, too, for a statewide jump of $37.6 million, or 38 percent.
Other gainers include Puerto Rico, Georgia and several agencies in
Westchester and Long Island.
In Wichita Falls, Tex., a city of 100,000 on the Oklahoma border, an
increased subsidy of $1.1 million, or 158 percent, is likely to be used to
shore up an aging infrastructure. It is only fair, said Richard E.
Schneider, executive director of the Wichita Falls Housing Authority, since
smaller authorities have long been accustomed to being overshadowed by
heavyweights like New York.
"It's just like a guy who needs to lose five pounds," said Mr. Schneider,
adding that he is a proud Brooklyn native. "In all honesty, it would
probably be good for them, as opposed to being anemic at the other end."
On the flip side, 608 authorities are projected to lose money, according to
the National Association of Housing and Redevelopment Officials. Among the
hardest-hit states are Nevada, with a 21 percent cut, and Alaska, with 75
percent. But of the individual authorities with annual subsidies of more
than $1 million, 11 of the 24 biggest percentage losers are from New York,
New Jersey and Pennsylvania.
In New York state, 45 of 84 authorities are slated to lose money, for a net
loss of $30.7 million. New York City officials say that the formula ignores
additional costs such as the 1998 law's requirement, now going into effect,
that many tenants perform community service. They say the formula also does
not recognize the economies-of-scale benefits that can come with centralized
expenses for contract bids, maintenance and heating services for big public
housing projects like those that dot New York City.
But officials also see the merits of the new philosophy, and say that the
negotiations with HUD were fair.
"Given that it could have been much worse, I think HUD did a decent job in
coming up with an outcome we could live with," said Douglas Apple, the New
York authority's general manager.
Baltimore faces a shortfall of $6 million - or 11 percent of its subsidy -
on top of a deficit of $11 million. So the housing authority may have to
fire its entire police force, suspend job-training programs and stop
delivering meals to seniors who cannot leave their homes, said Paul T.
Graziano, executive director of the Housing Authority of Baltimore City, and
commissioner of housing for the City of Baltimore.
Even Mr. Byrne, the formula's architect, anticipates growing pains. But he
believes that public housing will ultimately benefit.
"People initially said, 'How dare you go outside the public housing world?
Public housing is public housing, and you don't understand how life is in
there,' " said Mr. Byrne, now a housing consultant in Bethesda, Md. "But we
don't do residents any good if we don't manage the properties very well. I
think this is true program reform."