Federal Housing Program May Undergo Big Changes

Chanda Peters grew up in the same New York housing project where her mother lived as a child. As an adult, Peters raised her own three daughters for a time in federally subsidized housing in Los Angeles.

Then the cycle ended. Peters is a homeowner now, works full-time and receives no public assistance. One of her daughters is a student at UCLA; another studies at UC Riverside.

At a congressional hearing held Tuesday at the California Science Center in Exposition Park, Peters testified that her transformation was due in part to Section 8, the federal housing program that helped her pay her rent and purchase a home, but that now faces a fundamental change if a proposal introduced by the Bush administration is approved by Congress.

“I would really hate to see this program vanish,” said Peters, who is now an eligibility worker for the city’s housing authority. “There are people who need it. It can help them be as self-sufficient as I am.”

Hosted by Rep. Maxine Waters (D-Los Angeles) and Rep. Bob Ney (R-Ohio), the hearing is the fourth in a series designed to offer members of the public an opportunity to share their views on the proposed change. Ney, chairman of the House Financial Subcommittee on Housing and Community Opportunity, introduced the legislation calling for the change. But he has said he is neutral on the proposal and introduced the bill at the request of the Bush administration. Waters, the ranking member of the subcommittee, opposes the idea.

“Section 8 is so important to people in this country and to the people in my district,” Waters said. “We have to make sure the people are educated about what this administration is trying to do, and we need to have the responses of the people going back to the administration.”

Nationwide, Section 8 assists about 1.8 million low-income families. In California, 258,000 families are recipients. The program offers tenants vouchers that they can use to rent apartments or housing from willing landlords. Tenants typically pay about 30% to 40% of their income for rent. The rest is paid by the federal government.

Under the proposal, Section 8 would no longer be administered by the federal government. Instead, the states would receive funding in block grants and then assume responsibility for administering the program.

In his testimony before the subcommittee in May, Michael Liu, HUD’s assistant secretary, said the change could address the serious shortcomings of the program. More than $1 billion of assistance has been unused annually and returned to Congress for other uses. HUD also pays $1 billion in overpayments because of errors that Liu said result from complicated regulations.

“Reforming and simplifying the program can eliminate both of these staggering problems and provide more, not less, housing to those in need,” he said during the hearing held in Washington, D.C.

The states, Liu argued, are better equipped to “make timely and informed policy and funding decisions based on local need and market conditions.”

Currently, HUD administers the program with rules and regulations that apply to 2,600 housing agencies, a huge number that is difficult for HUD to monitor, he said.

But those who testified Tuesday -- including representatives of apartment owners, housing advocates, tenant groups and local housing authority officials -- were all opposed to the proposal. The block grant would mean a removal of the federal government from the process, leaving states to design programs that may not live up to federal standards. Fewer families might be served, families could be required to commit more of their own money to monthly rent, or housing funds could be tapped for other needs, opponents argued.

“There are some things like access to housing that need to have standards so all people have equal access,” Waters said.

Matthew O. Franklin, director of the California Housing and Community Development Department, said the proposal “could be a disaster for the state of California.”

“My biggest concern ... is that the legislation could wipe away congressional commitment to fund renewals of housing vouchers and to ensure that the program keeps pace with the real cost of rents in the future.”

Instead of streamlining the process, opponents said, the change would add another layer of bureaucracy. With California facing a $38-billion deficit, many speakers questioned the state’s ability to tackle a new responsibility. The proposal offers no funds for administrative costs, and it moves control away from local officials who know the housing market best and have developed relationships with owners, said Donald J. Smith, executive director of the Housing Authority of the City of Los Angeles.

“If you were renting an apartment in Los Angeles, would you go to an agent in Sacramento?” asked Smith. Currently, the federal government deals directly with local housing authorities.

Several local organizations, including ACORN, the Coalition for Economic Survival and the L.A. Family Housing Corp., testified against the proposal. Officials such as Gov. Gray Davis and Mayor James K. Hahn are also opposed.

Many speakers used the hearing to offer alternative ways to improve the existing program so that more owners would be willing to participate and tenants would have an easier time.

Ney said the hearing helped him to understand the situation in Los Angeles, which “has a whole different cost situation that we don’t have.”