Owner Update "Question of The Month"

Q: I have seen news stories that some housing authorities around the country have been terminating contracts and putting families off the Voucher program because of lack of funding. Is this really happening?

A. It is true that some housing authorities have lost a lot of funding under the current way HUD is calculating ABA (Annual Budget Authority) or the funds available to an HA to run the program. It is true that some HA's have had to make some drastic changes to their policies to deal with it. Columbus MHA was one that was looking at literally putting families off the program. A special plea to their legislators helped to deal with that
funding crisis.

The funding scenario is far from rosy under the current administration. HUD Secretary Alphonso Jackson testified on the Hill that "poverty is a state of mind," thereby summing up the hardline approach now being taken in regard Section 8 Voucher program costs. A recent HUD memo from HUD Secretary Alphonso Jackson instructs PHA's to shift the funding burden to residents and landlords. Secretary Jackson suggests the following to
reduce program costs:

review rents to be sure that the HA is "not paying a dollar more rent than they need to." The argument that rents are artificially high is based on Mr. Jackson's assertion that "vacancy rates are at their highest levels in decades."

modify the Payment Standard downward so that the HA will pay less in HAP and the tenant family will pay more of the rent burden. Sec. Jackson asserts that the Payment Standard "allows you (the HA) to pay landlords quite a bit more than the private market would suggest. If this is the case, do not feel obliged to pay any more than the going market rent."

Ironically the Payment Standard policies are based on the Fair Market Rent (FMR) system that HUD itself has set up to determine what an average rent in a community should be. Sec. Jackson says that the FMR system is based "on imprecise government data, these figures rarely reflect true market value." However, HUD has broad Congressional flexibility to determine how FMR's are set, and could improve the system if HUD thinks it is "imprecise."

TMHA is closely monitoring our local program costs, and following the national funding situation, to the extent that HUD makes funding information available. At the moment, we do not plan to significantly change our Payment Standard amounts or ask owners to reduce rents. However, Congress is now contemplating how much money they will give to housing programs next year. The decision is a major one, with difficult choices to make on how to fund military and foreign policy needs and still take care of domestic programs.

The next year will bring significant changes, and no one can predict what they will be. If we are faced with the need to reduce program costs, we will keep you informed of how we will do that. The only current change we've had to make to slow down how often we pull names off our waiting list so as to reduce the number of new families coming on to the program. This has had the effect of doubling the size of our waiting list. At best the
future is uncertain at this time, but we stay committed to serving TMHA families and owners under our mission to provide safe, decent, and affordable housing.

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