Low-Income Renters Await Vote on Subsidies : Housing: Tenants fear affordable rates and possibility of owning their complexes hinges on Senate decision.

By TIM MAY

Sept. 23, 1995 12 AM PT

SPECIAL TO THE TIMES

Renters in some federally subsidized apartments await an important vote in the U.S. Senate next week that could dramatically reduce the number of affordable units nationwide--and kill fledgling efforts by renters to buy their buildings and maintain low rents.

Among those watching will be 64-year-old John Dunlop of Sylmar. He and other residents at Valley Pride Retirement Village hope to purchase their 88-unit, federally subsidized building. Their complex is nothing special--there is no pool or sauna. “It’s basic housing,” Dunlop said.

But events in Washington could kill their plans.

If the Senate votes to remove next year’s funding for the Low Income Housing Preservation and Resident Home Ownership Act, landlords of about 120,000 apartment units nationwide who have provided subsidized rent rates for the past 20 years would be able to raise the rents they charge, housing officials said.

“That means that thousands of low-income tenants would not be able to continue to afford living where they currently live,” said Larry Gross, executive director of the Coalition for Economic Survival, which supports low-income tenant groups that are fighting to keep their homes.

California and Los Angeles, which have more low-rent units in the federal Housing and Urban Development program than any other region in the country would be hit hardest if no funding is provided next year, according to Congressional aides and housing advocates.

There are about 10,500 units at risk in Los Angeles, 2,667 in the San Fernando Valley. They are mostly found in places such as Sylmar, Panorama City, Pacoima, Van Nuys, North Hollywood and Canoga Park, said Luz Murillo, a management analyst in the city Housing Department. In about 24 cases across the city, building owners already are preparing to convert to market rates, as is the case at the 88-unit Silverlake Plaza in Silver Lake, whose residents recently received rent increase notices.

The federal program is threatened due to what congressional staffers called a “technical procedure” attached to a bill created by a Senate appropriations subcommittee.

The subcommittee had attempted to include housing preservation reform in a spending bill that would take effect next month. But the Congressional Budget Office found that the proposed reforms--which would provide capital grants to owners of low-income housing as an incentive to continue offering subsidies for another 50 years--were too expensive. As a result, spending for the program was not authorized until October, 1996.

That means that the owners of apartment buildings who signed up for low-interest government mortgages 20 years ago in exchange for providing affordable housing would be eligible to pay off their 40-year mortgages and raise rents now, officials said.

If that happens, housing advocates said, there could “substantial displacement” of poor families, senior citizens and disabled people who live in those developments.

If funding isn’t restored, the plans of dozens of recently organized tenants groups seeking federal assistance to purchase their buildings, including at least four groups in the San Fernando Valley, could be squashed.

The preservation program law, passed in 1987, requires owners who want to get out of subsidized housing to offer to sell to the tenants or to a nonprofit group working on behalf of the tenants.

With assistance from housing advocates and nonprofit attorneys, tenants are putting pressure on California lawmakers.

An aide to Sen. Barbara Boxer said the senator is closely following the issue and hopes to influence her colleagues to authorize spending to continue the program. But, he said, housing funds are “being pitted against other programs . . . If she says, ‘Let’s appropriate $624 million for preservation,’ that has to come from another program.”

There is a chance that an earlier approved House bill authorizing HUD to use $200 million for preservation may resurface, officials said.

If that happens, sources said, at least some of the affordable housing currently at risk could be preserved. But for now, low-income tenants are concerned about their ability to purchase the building from the owners.

Los Angeles housing officials expressed alarm at the possibility that the funding may be lost.

“There are about 150 affordable housing developments where the owners are already eligible, or will be eligible, to pay off their mortgages” and raise rents in Los Angeles, said Anna Ortega-Garcia, director of the city Housing Department’s prepayment office.

“They are all at risk. At some of the buildings, the tenants are trying to buy, but only one building has already done that,” Ortega-Garcia said.

That building is the 132-unit Mission Plaza Apartments in East Lincoln Heights, where tenants in December completed a $7.5-million purchase with loans from HUD and the city. The purchase enabled most of the tenants to preserve their Section 8 housing status.

Project-based Section 8 is a federal program that sets tenant’s rents at 30% of their annual income and provides a subsidy to pay the landlord the difference. It differs from Section 8 vouchers, which provide the individual tenant a specific amount of money toward rent. The tenant is then responsible for paying costs beyond the value of the voucher.

HUD officials say that if no funding is found for next year and residents are forced either to pay higher rents or move, the government would probably find money in other programs and give vouchers to those displaced.

Tenant group advocates counter that while such a plan is workable in places where housing is plentiful and reasonably priced, in cities such as Los Angeles and Boston, where rents are higher, low-income families would have difficulty finding new homes.

“From the city’s point of view, this would be a lot of affordable housing to lose,” Ortega-Garcia said. “We are dismayed at what is happening, but, like everybody else, we just don’t know how it’s going to turn out.”

Housing advocates from Washington to Los Angeles characterize the situation as close to a crisis, and are putting their hopes in a lobbying campaign being waged by low-income tenants and housing advocates from Los Angeles and other cities that would be affected if funding is eliminated for next year.

Kathi Frazier, a board member of the Los Angeles County chapter of the National Alliance of HUD Tenants, left for Capitol Hill on Thursday from her apartment at Lurline Gardens in Chatsworth. A working, single mother, Frazier said she had a message to give to lawmakers.

“What Congress is doing affects everyone,” Frazier said. “You have a lot of low-income, working people who just don’t make enough money to pay market rates,” said Frazier, who, as president of the tenant association at Lurline led an ultimately unsuccessful effort to purchase her building.

The owners gave notice to tenants in 1992 that they wanted to prepay the government mortgage and convert to market rate rents, but later changed their minds and decided to remain in the preservation program.

The action raised a red flag to Frazier and tenants at other complexes, like Valley Pride and another Sylmar complex, Astoria Gardens Apartments.

At Valley Pride, the owners--a group of limited partners--are cooperating with tenants’ efforts to buy. It’s a homey place, where residents respect the property and each other. They tend small garden plots and flower beds, and some volunteer at Olive View Medical Center and at a nearby convalescent home.

The residents have been working with the nonprofit Ecumenical Assn. for Housing, in San Rafael to buy the building. But, because of the uncertain situation in Congress, many of the residents are worried about the future.

Said Dunlop, an artist who had a stroke a few years ago: “If we have to move out, if they give all of us vouchers and make us move, there aren’t that many good buildings to go to.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Reduced Lifestyle

Thousands of families and individuals who are currently receiving Section 8 housing subsidies may soon find their rents skyrocketing if Congress votes to do away with the subsidies. Here are profiles of a family and a disabled individual who will be directly affected by the proposed cutbacks:

JEFFREY AND CHARMAINE GEISER

* Employment: Jeffrey, 37, works as an X-ray technician at an area hospital; Charmaine, 35, is unemployed.

* Children: 3

* Income: $20,000

* Rent: $444 for a two-bedroom apartment.

* Rent without subsidy: $806

****

PETE MARTINEZ

* Employment: Pete, 52, is a former trucker who disabled his right arm in an accident.

* Children: None

* Income: $692.36 a month

* Rent: $311 for a one-bedroom apartment.