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Affordable housing may soon be harder to find for some Section 8 renters

By Matthew Schroyer/For CU-CitizenAccess -- With budgets crimped by dismal job prospects and the cost of living ever-increasing, more and more Champaign families are in need of federal housing assistance.

The demand has hit the local housing authority so hard that the wait list for Section 8 vouchers, which pays for rental housing for needy families, had to be closed. Hundreds in Champaign County now wait for the subsidy, also known as Housing Choice Vouchers (HCVs).

According to Data.gov, the online Federal data clearinghouse, the Housing Authority of Champaign County (HACC) had 1,225 HCVs leased to residents in April 2010. In Illinois, housing authorities administered 216,236 vouchers that same month. And nationwide, more than 6 million receive housing assistance through the Section 8 program.

Officials said demand for affordable housing has always been high. But now, tenants and landlords are complaining that something new might be making the situation worse: new policies implemented by HACC on how Section 8 vouchers must be used.

Margaret Neil, a resident of the Joann Dorsey public housing complex and resident commissioner on the HACC board of commissioners, said commissioners have been receiving complaints from tenants who are suddenly prohibited from renting apartments that used to meet affordability requirements, and from landlords who used to be able to charge higher rents.

“What seems to be happening is, in the past, a person would get a voucher, say that three-bedroom voucher would be for $800. So they would go out and find a place, hopefully within that range,” Neil said.

The Department Housing and Urban Development (HUD), the Federal body which administers Section 8 vouchers and funding, requires local housing authorities to adhere to a policy of “rent reasonableness.” Tenants are only allowed rent assistance up to a certain amount, as determined by their income, number of dependent children, the money in any bank accounts, the fair market value of housing in the area and other factors.

Rent reasonableness has been a longstanding policy in the HCV program, but how it is implemented varies in each Public Housing Authority (PHA). HUD gives PHAs, like the Housing Authority of Champaign County, a set number of vouchers along with funds to administer those vouchers. Each PHA administers the vouchers according to the rent reasonableness calculations mandated by HUD, but HUD gives authority to each PHA to decide a cap, or payment standard, for each voucher.

Recently, HACC lowered those payment standards, leaving some landlords and renters in difficult positions.

“So what’s happening is if they have no income, after adjustments for utility allowance and the number of kids they have, the voucher may say $800, but actually after they do those breakdowns, it may say that it’s only affordable to that tenant. And I’m being hypothetical, but maybe only affordable at $650,” Neil said. “So, where do you find a three-bedroom [apartment] for $650, you know?”

“What do you think a landlord’s going to say? Hell no.”

Reduced money

Lorez Davis, who manages HACC’s Section 8 voucher program, said HUD permits housing authorities to establish a payment standard that’s between 90 and 110 percent of what HUD declares is Fair Market Rent (FMR). How the payment standard is adjusted can make the difference between whether all vouchers are being leased, but with a budget deficit to the Authority, or whether all the HUD money is being used for rent, but with fewer people given vouchers.

“[HUD might] give you 100 vouchers, and… an additional $50,000 a month to service those vouchers,” Davis said. “I may be able to service those vouchers for less. If I have to service them for more, I have to figure out where the money is going to come from.”

HUD previously allowed landlords to charge up to 110 percent of comparable market rates for their units, but following a recent audit of HACC, cut the payment standard to 95 percent.

 “[HUD] gives us a certain amount of money to give out a certain amount of vouchers, and what happened was, we were putting out that money, but there were less vouchers, meaning that we were overpaying some vouchers,” Board of Commissioners Chair Alfred Anderson said.

HACC Executive Director Ed Bland said a copy of the audit wasn’t immediately available. A FOIA request for the audit had been filed with HACC, but hadn’t been responded to after several days. The Illinois Housing and Development Authority (IHDA) referred requests for the audit to a HUD field office in Columbus, Ohio, where the most recent audit of HACC on record was from 2003.

Landlords respond

More than a dozen landlords recently showed up at an HACC discussion session, where commissioners answered concerns about the rent reasonableness calculation.

“Two years ago, we wouldn’t have had this meeting. And the reason we wouldn’t have had this meeting is simple; the payment standards,” said Reggie Jones, owner of Jones Property Management, who houses about 40 Section 8 tenants. “The payment standards have been lowered, and they have been lowered significantly.”

Jones said that most landlords would accept a smaller cut in payment standards, but that the current standards are “ridiculous” and are making his tenants struggle to find affordable units.

Jones said he was concerned about consequences on the wider Champaign community as a result of the changes, and warned that it might lead to an increase in concentrated poverty.

“It’s made it very challenging for us participants to find diverse housing, because they don’t have as much a budget, or as much dollars to work with to find diverse housing, because they are limited with the decrease due to payment standards,” he said.

Antuwan Neely has been renting to Section 8 tenants for seven years in Champaign County, and has similar concerns about how HACC’s decision might lead to higher concentrations of poverty. He said the current payment standards run contrary to the central tenets of public housing.

“That’s not the spirit of the mission statement of the housing authority,” Neely said. “The mission statement is to actually promote participation of landlords outside of areas of high-concentration of poverty. So that doesn’t mean that everybody on Section 8 can live … Lincolnshire fields by no means, but certainly if our payment standards are sufficient that someone that's working and trying to work themselves into a self-sufficient place, why shouldn't they be able to live in Holiday park or any of those other places?”

Some HACC board members contend that landlords may have been artificially inflating the prices of their units, beyond what FMR would dictate.

“Once Miss Davis came and looked at all of them, what's happening, then we may not have been following the sequence of events that we need to do and making sure the housing is affordable to the clients who are there,” Anderson said.

But landlords insist they don’t set the rent for Section 8, and that the deductions in the rent reasonableness calculation for utilities has an inherent bias against landlords, making their rent demands seem inflated.

“I’m marketing a property on Kirby Avenue, I say I want $950 for it. [HACC] does that request, and I ask for that price. Unlike the conventional market, if you were looking for a place to stay and you asked for what the rent is, you might ask if there were utilities included, but for most people in a single family house, you assume they're going to pay for their own power and water and those types of things,” Neely said.

“So what happens here is, now you have a housing authority, that if you know how that system works, you know that you’re not going to get $950 for that Section 8 tenant., because they are going to reduce it by those utility allowances. So you’re going to get that phone call that it's not affordable at $950, by $125,” he said.

“So it can make it appear as though the landlord is out to get you or something like that,” he added.

Neely said he’s concerned that the effects of the way HCVs are being administered might have tremendous long-term impact with the way Section 8 tenants are perceived. Neely manages about 100 houses in the county, and said he has had neighbors of those properties become concerned when they learn that Neely rents to Section 8 tenants.

“It has a negative connotation. Just saying section 8, I'll be honest, a lot of people think that will be the African American Mother with too many kids and isn't going to take care of the yard, and there's going to be junk cars and all of those stereotypes that can be associated with low-income families. So I try to dispel that by letting people know that there are a lot of people out there whose houses aren't subsidized, that I wouldn't want to live next to, either.”

Although concerned tenants had been making complaints with landlords over the new rent reasonableness guidelines since early 2010, landlords say there are still many more tenants who haven’t been affected yet and are unaware of impending changes.

When the payment standards were lowered, many tenants were still under the older, higher payment standards, as the board elected to grandfather the new standards in over a period of 18 months. But now the time is approaching when many tenants will have to renew their leases, and will not be able to continue asking for the higher payment standards.

“So, now, as of June of this year, that’s when the people who are already in place, and for who the payment standards didn’t change, it’s going to become effective,” Neely said. “We had a lot of people calling for two-bedroom houses for example, and when they’ve got not a lot of income, payment standards for a two-bedroom is $670 a month. After they apply some costs and utilities to the tenant which come off of the price, a lot of the landlords have been asked if they would accept prices like, $480, $520 for a two-bedroom house or apartment.”

“And so that’s where that’s going to create hardship for those families, because there aren’t a lot of places around where you can get a two- bedroom in the $500 range, if it’s not already taken,” he added.

Anderson said the board would look into adjusting the payment standards in the near future.

“What I want the Housing Authority to do is to go back and look at the pay status. We saw the scenario where they wanted to re-run those for 105 percent, 110 percent. That had an effect on what the landlords would receive,” he said. “But then we have to look at that in the context of what the Section 8 budget is, and whether or not we could afford to raise it back up to 105, 110 percent.”

¨ Copyright 2011 CU-CitizenAccess.