Deal in Works to Save Aid for Low-Income Renters

An agreement being crafted by city officials and the Department of Housing and Urban Development will likely preserve the rental subsidies of 5,000 low-income families whose assistance is now threatened by funding problems, officials said Friday.

Under the agreement, federal housing officials will closely supervise the Housing Authority of the City of Los Angeles, but the city’s Section 8 program will not be placed in federal receivership, which had been a possibility, HUD officials said.

“I’m excited about developing a new relationship with HUD and a new partnership so we can move forward,” said Mayor James K. Hahn. “Our goal is to make sure the Housing Authority is doing the best job it can do.”

HUD Assistant Secretary Michael Liu could not be reached for comment. A HUD official in Washington, who spoke on condition of anonymity, said HUD had called for a change in leadership as well as policy changes at the L.A. agency.

“Obviously, the reason we’re doing this is first and foremost our concern to make sure that the families that are in the voucher program in Los Angeles continue to be served,” the official said. “That’s our primary reason for being this involved and going in and being as assertive as we’re being with the city and the Housing Authority.”

The agreement, which must still be signed by HUD officials and approved by Housing Authority commissioners, is expected to be voted on Monday at a special board meeting.

About 44,000 families in Los Angeles receive assistance under Section 8, a federal program that subsidizes rents of “very low-income” or “extremely low-income” families under HUD guidelines. Section 8 participants pay about 30% of their monthly income toward rent, with the program paying the rest.

In February, for the first time in its history, the Housing Authority canceled the rental vouchers of 1,500 low-income families because of a lack of funds. Another 5,000 recipients could have had their vouchers canceled.

Local officials said the problems stem from a convergence of events. In past years, officials issued more vouchers than they had been allocated in an attempt to make sure no vouchers went unused, much like the airline practice of overbooking flights.

When overbooking resulted in extra vouchers being used, housing authorities were allowed to use reserve funds or future voucher allocations to cover the additional cost. But Congress recently passed a law that took away the ability to use reserves and HUD has not issued new vouchers.

The change occurred just as tenants were experiencing more success in finding owners willing to accept the vouchers. As a result, more vouchers were in use than the city could cover.

Local officials sought additional funds from HUD and pushed officials to determine whether money in reserves could be used to pay for monthly subsidies.

HUD officials blamed the problems on local officials, saying they had been warned to stop the overbooking. The agency sent analysts from Washington to review Housing Authority records. The authority hired an accounting firm.

The new agreement has not been released to the public but has been described as a breakdown of steps that HUD, the Housing Authority and the city will take to resolve the program’s problems. It was unclear if the agreement would provide any relief to the 1,500 families who had their vouchers canceled.

Under the agreement, HUD will not provide extra funds to the local Housing Authority. Instead, money would come from the authority’s reserve accounts, officials said. About $63 million in voucher program money had been transferred into other accounts over the last two years, a HUD official said.

“One of the very first things we insisted on was that that money be returned to the program,” the official said. “There was a clear and critical need for that money.”

The agreement also calls for HUD to offer the Housing Authority technical expertise.

A change in leadership has already begun. Last month, the Housing Authority’s executive director stepped down. At Mayor Hahn’s request, the chairman of the board of commissioners also stepped down but remains on the board. More changes lie ahead.

“We’re going to be bringing in new leadership at the Housing Authority, so there’s an opportunity to make sure every program is being run adequately, appropriately and professionally,” Hahn said.

At HUD’s urging, other actions also have been implemented. Last week, the board of commissioners voted to cut the monthly subsidy amounts for Section 8 recipients. The move will force tenants to pay a bigger share of their rent or seek cheaper units, a prospect that worries housing advocates and tenants.

Sarah Dusseault, deputy mayor for economic development and a key figure in the negotiations with HUD, said the agreement addressed a specific crisis and “sets Section 8 on a cost-containment path, but it’s not a long-term arrangement.”