HUD's funding change feared

THE BALTIMORE SUN

More than 500 Maryland families could lose their federal rent subsidies in Montgomery, Howard and Baltimore counties because of a Bush administration change in the funding formula designed to limit the program's growing costs.

The funding limit has local officials worried that for the first time in the 30-year history of the program, referred to as "Section 8," they'll have to take housing vouchers away from low-income residents who depend on them for a place to live.

Many local agencies see no easy way out.

"Over 50 percent of our vouchers are currently being used by elderly or disabled people who do not work and have no ability to work," said Maureen Robinson, spokeswoman for Baltimore County's housing program. They can't pay more in rent, she said.

Baltimore County officials said they fear up to 309 families could lose their vouchers under the new Department of Housing and Urban Development formula, with another 200 at risk in Montgomery County. A Howard County official said 29 families of the 701 with vouchers could lose their support. However, Anne Arundel, Carroll and Harford county officials said they expect no one to lose vouchers.

Baltimore City's program, by far the largest in the state, is not threatened, said housing Commissioner Paul T. Graziano, because the city's rents are lower and its housing stock is in such poor shape that only 85 percent of the city's vouchers are in use.

"There is a 70 percent failure rate on [home] inspections" for the Section 8 housing program, he said.

The Section 8 program, which spends over $16 billion a year helping 1.9 million families nationwide, allows low-income families to pay up to 30 percent of their rent, with the government paying the rest. Some elderly and disabled renters pay less, while some pay nothing.

The funding formula change was announced late last month in certificates sent by HUD to local housing agencies. The formula would limit money sent to local housing agencies to the level they received in August 2003, with a small additional amount for inflation.

Local housing officials, who administer the Section 8 program, said the change in the funding formula represents a sharp departure from past practice. Before, federal officials pressured local housing agencies to use all the Section 8 money they received. Now, HUD is saying they should have held back more.

Local programs facing the most risk appear to be those that have tried to use all their vouchers, depending on client turnover to keep them from exceeding their federal allotments. As a result, some have given out more vouchers than they have money to pay for, leaving them hanging when HUD limited the funding.

"We've got to make a decision on whom we will drop. If our money is cut, we have to make a decision about how many families are no longer on the program," said Leonard S. Vaughan, Howard County's housing director.

HUD top officials denied that their actions will cause a major problem.

"There are over 2,500 housing agencies across the country. Those who believe they have a crisis situation, I can count them on two hands," said Michael Liu, HUD's assistant secretary for public and Indian housing.

Vaughan said federal officials aren't taking into account the sharp rise in housing costs in areas such as Howard.

"What has happened in Howard County is rents have gone up anywhere from 5 [percent] to 15 percent," he said. "Incomes have not risen proportionately. Mr. Liu's assessment is inaccurate at best. Annoyingly inaccurate."

Maryland's senators have written to HUD, seeking to delay or stop the change. U.S. Sen. Paul S. Sarbanes said he suspected that HUD is using the funding change as part of an effort to convert Section 8 into a block grant program, which would give local agencies a set amount of money with more flexibility in how to use it.

"You have to understand that HUD's been trying to block grant this program. There's considerable suspicion that this is just a backdoor way to achieve block granting," a proposal that Congress has rejected, he said.

Sarbanes said HUD Secretary Alphonso R. Jackson assured Congress during his confirmation hearings "that no one getting a voucher will lose it."

"We're trying to back HUD off on this. We think they're wrong," Sarbanes said.

Some housing officials say they're still uncertain exactly what will happen after July 1, when local government fiscal years begin.

Baltimore County stands to lose about $1.8 million, or 6 percent of its Section 8 money. "Right now, we're trying to manage that loss through attrition," Robinson said, though the waiting list is choked with 10,000 names and the county, like many others, closed the list.

"We could lose a couple of million" dollars, which could mean about 200 of the 5,662 families who get vouchers could lose them, said William P. Murphy, director of the Montgomery County Housing Opportunity Commission.

Murphy, along with officials in Prince George's and other counties, said they're still uncertain of the change's effect because they don't have enough information. And Westminster city officials said they never even got the notice.

"Whatever the number is into the future, they're not going to provide us increases. If family income goes down, the subsidy goes down." Murphy said.

But Liu said there should be no confusion about the change.

"All they need to do is read the notice. The notice is very clear," he said.

"It is a discretionary program. It has increased more than 10 percent a year over the last few years. Let's be prudent. Over time, that is not sustainable," Liu said.

But at a time when war spending and tax cuts have added billions of dollars to the federal deficit, some aren't buying that argument.

"It's an extraordinary attack on the Section 8 program, which has always been a Republican program," said Trudy McFall, a former state housing official who now heads both the Annapolis housing authority board and Homes for America, a private nonprofit group.

Annapolis is in an unusual position, she said, because the dearth of rentable housing there means only half the city's Section 8 vouchers are being used.

However the issue is resolved, officials said, changes are clearly coming -- and they could be painful.

"There are ways to cut costs," said Murphy, the Montgomery County housing official. "But whatever you do will affect families."

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