Reinventing Section 8 - HUD User News FWD

Tom Boland (wgcp@earthlink.net)
Wed, 28 Jul 1999 08:08:49 -0700 (PDT)


FWD

Date: Fri, 25 Jun 1999 09:44:52 -0400
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From: ".Housing" <housing@aspensys.com>
To: "'hudusernews@aspensys.com'" <hudusernews@aspensys.com>
Subject: Reinventing Section 8

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Although it currently helps 3 million families around the country, HUD's
Section 8 program faces a critical challenge that threatens the ability of
these families to afford decent housing. Starting in 1975, HUD signed
20-year contracts with private owners to provide project-based Section 8
subsidies to their properties. These long-term contracts are now expiring,
creating widespread fear and uncertainty about whether the housing will
remain affordable.

The magnitude of this problem is documented in a new HUD report.  "Opting
In: Renewing America's Commitment to Affordable Housing" quantifies the
number and locations of subsidized units that are threatened by impending
contract expirations. It then lays out a set of principles to guide a
comprehensive solution.

The Section 8 program helps low-income households rent privately owned
housing units. Residents pay approximately 30 percent of their income for
rent and HUD pays the rest. The program includes two forms of housing
assistance: tenant-based and project-based. Tenant-based assistance provides
almost 1.6 families with vouchers that they can take to new rental housing
if they decide to move. Project-based assistance is tied to specific rental
housing units occupied by about 1.4 million families.

Using the latest data on Section 8 expirations, "Opting In" points out that
during the next 5 years, two-thirds of all project-based Section 8 contracts
will expire, totaling almost 14,000 properties that contain 1 million
subsidized housing units. When contracts expire, both HUD and the owner can
choose not to renew. The majority of properties remain in the program, but
the latest data show that about 10 percent of owners "opt-out" and convert
their developments into unsubsidized housing.

"Opting In" also points out that budget constraints have exacerbated the
problem by limiting contract renewals to 1 year, which multiplies the number
of contracts that face expiration each year. This magnifies the uncertainty
of residents and owners about the security of their housing. HUD protects
residents in properties that opt out by providing vouchers, which can be
used (in most areas) to remain in their current units or move to other
housing. Yet resident can be faced with substantial hikes in the portion of
the rent they pay, forcing them to move. With the current shortage of
affordable housing, families who need to move often have limited options.

The report discusses three reforms which HUD has already begun to implement
that apply to future renewals of Section 8 contracts:

*	Subsidize only quality housing. When a contract expires, HUD should
continue to keep well-maintained properties in the program, but refuse to
renew properties in poor condition. Contracts with property owners unwilling
to follow program rules should not be extended.

*	Pay a fair price. Rents paid by HUD should be based on what a
property is worth. HUD should not pay an owner more than the property could
get on the open market, but neither should it expect owners of good housing
to accept less than a fair price.

*	Preservation is not enough. Congress and HUD must expand authority
for vouchers that protect residents from rent hikes in developments that
opt-out of Section 8. In addition, it must relieve the affordable housing
crisis by increasing the number of families assisted by the Section 8
program.

"Only by preserving the best of project-based Section 8 housing, protecting
residents in properties that leave the program, and expanding the supply of
Section 8 vouchers can HUD and Congress fulfill their commitment to the
Nation's neediest citizens," concludes the report. "In an era of plenty, the
time to act is now."

Copies of "Opting In: Renewing America's Commitment to Affordable Housing"
can be requested from the HUD USER web site at:
http://www.huduser.org/publications/polleg/optin.html or by contacting HUD
USER.

You can contact us at:

HUD USER
P.O. Box 6091
Rockville, MD 20850
1-800-245-2691
1-800-483-2209 (TDD)
(301) 519-5767 (fax)

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