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Bush aims to localize rent aid

The Bush administration is proposing to transform a cornerstone of the nation's housing policy for the poor, replacing a federal program that provides rent vouchers to 2 million families with a system that would give broad new powers to local housing authorities.
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The Bush administration is proposing to transform a cornerstone of the nation's housing policy for the poor, replacing a federal program that provides rent vouchers to 2 million families with a system that would give broad new powers to local housing authorities.

The idea, which is intended partly to save money, is a sequel to the administration's failed attempt a year ago to convert federal rent vouchers -- the government's largest form of housing subsidies -- into block grants run by states. It would bypass states, giving lump-sum payments directly to the nation's 3,000 public housing authorities, along with more freedom from federal rules than the White House envisioned last year.

This year's version would eliminate a long-standing rule that families in the program, known as Section 8, pay no more than two-fifths of their income in rent. It would erase a requirement that three-quarters of the vouchers go to families who are extremely poor. And it would omit the federal quality standards that have covered all the apartments and houses in which participants live.

In his second attempt to redefine Section 8, President Bush has changed important details but kept the philosophy behind the plan that was quickly decried last year by lawmakers of both parties and by many affordable-housing and anti-poverty groups.

Like the first one, the new proposal would extend to housing policy central ideas behind the welfare overhaul of the 1990s: reduced federal control and efforts to lessen low-income people's dependence on long-term public assistance. Like last year's, the proposal would replace a government guarantee of a specified number of rent vouchers -- currently 1.9 million -- regardless of cost with a specific sum of money for housing authorities to stretch as far as they can.

Section 8 has been a staple of federal housing policy for three decades. It is substantially larger than the country's network of government-owned "public" housing. The program allows poor families, disabled people and the elderly to get a rent voucher from a local housing authority and take it to any private landlord in the community willing to accept it. The tenant pays a portion of the rent, and the government pays the rest. Waiting lists have been growing around the country, and some housing authorities have closed their lists because they are so long.

Debate over the "Flexible Voucher Program," mentioned in a few sentences in the budget Bush released in February, is in early stages in Congress, which would have to approve it. Already, the plan is stirring some of the opposition that thwarted its predecessor.

At a hearing this month, Sen. Christopher S. Bond (R-Mo.), chairman of the Senate Appropriations subcommittee that handles housing issues, said the proposal has "fatal flaws," providing too little money and directing rental help away from the families who need it most. Bond predicted the Senate would not have time to consider the plan this year. A spokesman for Rep. James T. Walsh (R-N.Y.), chairman of the House Appropriations subcommittee that considers housing, said Walsh was not prepared to discuss the proposal.

Michael Liu, the Department of Housing and Urban Development's assistant secretary for public and Indian housing, said in an interview that the proposal would create greater "flexibility and simplicity," allowing local housing authorities to serve more people, serve them better and decide who most deserves the help.

Liu said that, under current rules, housing authorities cannot give out more than their allotted number of vouchers, even if they have money left over. In addition, he said the program no longer would require federal rent standards for each community, giving housing authorities incentives to secure the lowest possible rents. And, he said, the government would create financial incentives for housing authorities that can move people quickly out of assisted housing or steer them toward homeownership, a major goal of Bush's housing policy.

The plan carries no requirement that housing authorities serve as many people as they do now; instead, HUD would create an acceptable range, perhaps 90 percent to 105 percent of their current number of clients, Liu said. In addition, the program no longer would be guaranteed to keep pace each year with increasing rents, but it would include a still-undefined inflation adjustment. And housing authorities could choose to focus mainly on working families with higher incomes than the typical Section 8 participant today.

In the Washington area, the rule changes would have pronounced effects. The current requirement that 75 percent of the vouchers go to people making less than 30 percent of the local median income means most vouchers in the area are distributed to families making less than $25,000 a year, according to Sheila Crowley, president of the National Low-Income Housing Coalition. The proposal would allow an unlimited share of the vouchers to go to families with incomes up to 80 percent of the local median income; as a result, Washington area families with incomes of nearly $68,000 could take part, Crowley said.

The proposal, Liu said, responds to a trend in which Section 8 has accounted for an escalating share of HUD's budget, from 36 percent of the agency's spending in 1998 to about half today. Other HUD officials, speaking on the condition of anonymity, said the proposal is intended not to cut the program but to slow the rate of increase; next year, it would save $1.6 billion, they said.

Budget figures, however, show that the increase Bush has proposed for Section 8 next year, from $16.4 billion to $16.9 billion, includes funds not spent in previous years. Excluding those funds, the administration's investment decreases.

Liberal policy analysts and some affordable-housing advocates say they worry about the budget changes and the loss of federal rules. One of the constituencies the administration was counting on for support -- public housing directors, who opposed last year's idea of state control -- say they like the prospect of greater freedom to set their own rules. Still, Timothy G. Kaiser, executive director of the Public Housing Authorities Directors Association, said, "We cannot support the proposal based on the funding levels."

Crowley of the low-income housing coalition said: "This is not about good housing policy. This is really just about figuring out how to contribute to deficit reduction. It's much worse than last year."