Public Housing Unchained?

In the three-year legislative odyssey called public housing reform, there is near universal agreement that overhaul of public housing is needed. It would be a mistake, however, to conclude that the bill passed by the House last spring, and its counterpart, finally reported out of the Senate last month, reflect a consensus about how that change should take place.

Residents and low-income advocates remain deeply concerned about changes that proponents are counting as major victories of the reform effort so far. Examples of such measures include the end of the one-for-one replacement requirement, the repeal of national preferences for admission, and the creation of new admission guidelines giving public housing authorities (PHAs) unprecedented access to applicants’ confidential health and criminal records.

Many see national guidelines regarding the replacement of obsolete units, for example, as the epitome of well intentioned yet failed policies of the past that have to be dispensed with in order to save the program. Others see these provisions (or some renegotiated vestige of them) as critical guide-posts for a national government whose commitment to housing the poor has waned to such a degree that we now have over 5 million households with worst-case housing needs and $0 in HUD’s budget for new housing vouchers.

As the final conference on a public housing bill ensues, it seems that external budget pressure is the tail wagging the dog on this reform effort. Public housing has taken a 25 percent cut in funding over the last two years, and the outlook is for more cuts. (These efforts affect Section 8 tenant-based and multifamily housing assistance as well.) The Center on Budget and Policy Priorities’ (CBPP) analysis of this year’s balanced budget agreement projects that domestic discretionary spending will be cut by $95.6 billion in the agreement’s first five years and could mushroom to $294 billion in the next five-year period.

“It is basically a battle of attrition” notes one administration official, describing the current competition for domestic discretionary appropriations.

If past is prologue, it is inevitable that public housing and other low-income housing programs will be hard-hit by these reductions. Robert Greenstein, head of CBPP, notes that during the 104th Congress, 34 percent of cuts to domestic discretionary programs were targeted to those serving low-income people, although those programs comprised only 21 percent of the spending in that category. In addition to spending cuts, HUD’s staff has dropped from 17,000 in the late 80s to 9,000 today. Secretary Andrew Cuomo has promised to reduce personnel to 7,500 during his tenure. This downsizing could severely hinder HUD’s capacity to manage its mission, and sets the stage for more program cuts, attrition, and “reform.”

Finally, public housing reform will be much affected by other reforms and shifts external to HUD, such as the progress of welfare reform, the growth and strength of resident-driven community building initiatives, and the success of emerging public/private partnerships. The public housing bills about to enter conference both diverge from and intersect with current law – sometimes not to the best effect.

Who Gets Assisted?

The House and Senate bills follow existing law in restricting occupancy for both public housing and tenant-based Section 8 to low-income families with incomes at 80 percent of median and below. However, both bills would drastically alter who gets served by establishing targets directing more of an ever-shrinking resource to relatively higher income people.

Each bill contains a provision prohibiting  concentration of low-income families in particular buildings or developments and affords HUD power to review income and occupancy characteristics. The House measure, H.R. 2, would require PHAs to reserve at least 35 percent of public housing units which become available during a given year for extremely low income families – those with incomes at 30 percent of median and below. For tenant-based Section 8, 40 percent of available vouchers must serve such families. H.R. 2 includes a “fungibility” feature which would permit a PHA which exceeds its Section 8 target by some percentage of units to offset an equivalent percentage from public housing. In this way, by offering more certificates than the mandatory 40 percent to the poorest applicants, PHAs would free up units in public housing for higher income households. This is deemed as one mechanism designed to move PHAs toward the economic integration many observers believe key to the public housing program’s survival.

The Senate bill, S. 462,  establishes a tier of targets. For public housing units that become available each year, 40 percent must serve extremely low income families. Seventy percent of the units shall house families with incomes at 60 percent of media and below, and the remaining 30 percent can serve families between 60 percent and 80 percent of median. The Senate bill establishes these same numerical targets for project-based Section 8. For tenant-based Section 8, S. 462 reserves 65 percent of vouchers for extremely low-income families. Ninety percent of all vouchers that become available must serve families at or below 60 percent of median. In both public housing and the tenant-based program, a PHA, acting with HUD approval, can, for good cause, establish different eligibility standards.

Federal occupancy preferences, assuring that families with the most urgent housing needs received assistance first, are permanently repealed in each bill. In their place, PHAs are authorized to establish preferences based on local housing needs. Both bills carve out exceptions. Each includes a provision encouraging a preference for victims of domestic violence. The Senate report also urges PHAs to consider the needs of the growing elderly population in developing preferences. On the other hand, both bills eliminate PHA discretion to provide assistance to non-citizens, who are often among the poorest households, before their resident status is established.

Both bills pay lip service to aiding working families and those seeking to make the transition from welfare to work. However, H.R. 2’s exceedingly weak income targeting and S. 462′ s only moderately better targeting, compounded by other changes in the current system, will shut-out many families moving off of welfare. In many metropolitan areas, 30 percent of area median income is well above minimum wage levels. Therefore, both bills income targets will permit PHAs to meet their quotas for servicing people earning 30 percent of median and below without renting to any minimum wage workers or low-wage, part-time workers, much less welfare recipients.

Public Housing Rents

Although H.R. 2 retains the Brooke Amendment, which caps rents at 30 percent of income [See Shelterforce #85 and 87], it also establishes an alternative “family choice” rent scheme. Residents can opt to either pay income-based rents as in existing law or a flat rent set annually by their PHA, based on the rental unit’s value and capped at actual monthly operating costs. The flat rent must not serve as a disincentive for working families to live in public housing. A family that chooses the flat rent but then experiences changed circumstances, such as the loss of a job, a death in the family, or loss of assistance, is entitled to switch to an income-based rent. The Senate bill preserves the Brooke Amendment rent structure and mandates that PHA rental policies reward work and economic self- sufficiency.

Each bill permanently authorizes minimum rents, established in recent appropriations measures. Current law allows a minimum rent of up to $50. H.R. 2 calls for a charge of from $25 to $50 with PHA authority to provide an exemption in the event of hardship. The Senate bill, on the other hand, requires minimum rents of up to $25 with no hardship waiver. If, upon request for a hardship exemption, a PHA determines that the hardship is temporary in nature, it is still barred from granting the exemption for 90 days. However, the applicant is protected from eviction for non-payment during the 90-day period. If a subsequent determination is made that the request for exemption is valid, the exemption is to be retroactively applied.

Current law makes certain standard deductions in order to establish rent. Both bills expand this system to encourage work and assist the elderly. H.R. 2 continues some mandatory exclusions, such as a standard deduction for elderly or disabled households; certain unreimbursed medical expenses for elderly families (deductions for non-elderly families would be subject to appropriations); certain child care expenses, child support, and the earned income of minor household members. S. 462 would provide the same exclusions except for non-elderly or disabled medical expenses, child support, and alimony. The bill gives PHAs broad discretion whether to establish exclusions from annual income such as excessive work- or school-related travel expenses and earned income – exclusions which, if mandatory, would clearly benefit people making the shift from welfare to work.

In one clear attempt to encourage work, both bills cap the amount of rent working families must pay. S. 462 authorizes PHAs to establish ceiling rents that reflect the reasonable market value of the housing but do not exceed 75 percent of monthly operating costs plus – at their discretion – a replacement reserve. The House bill contains a similar provision.

For families moving from welfare to work, both bills encourage PHAs to exercise “best efforts” to enter into cooperative agreements with local social services agencies responsible for providing assistance. The rules related to income changes resulting from welfare requirements must be incorporated into each family’s lease. Neither bill entitles families whose welfare benefits are reduced due to fraud or failure to comply with welfare reform requirements to a rent decrease, as does current law. But the bills make clear that termination of benefits due to expiration of welfare time limits alone won’t bar households from receiving a rent reduction.

Tenants’ Rights

Both bills generally extend current public housing and Section 8 lease provisions that affect tenants’ rights. However, both eliminate “endless lease” protections (which formerly prohibited lease non-renewals except for good cause) and the 90-day notice of an owner’s decision not to renew a Section 8 contract for business reasons.

The House bill requires the use of standard leases as in non-assisted housing. In states with strong pro-tenant laws, this may not have as great an impact. However, if these provisions are permanently enacted, those in landlord-oriented jurisdictions will increasingly confront arbitrary lease non-renewals and income discrimination.

Despite the general principal that tenants receiving housing assistance be governed by the same rules as private-market tenants, the bills impose community service requirements, and the House bill adopts graduation date requirements, as conditions of tenancy. Both bills require adult members of households to perform eight hours of community service. The Banking Committee report on H.R. 2 notes that “Among the beliefs inherent in this legislation are that federal housing assistance should be temporary assistance allowing the family to advance economically toward self sufficiency, and that each recipient bears a responsibility to contribute something  toward the improvement of their community as a means of giving something back for this assistance.” The bill notes that target dates are not meant to allow PHAs to evict or terminate assistance to those who fail to meet the graduation date.

Both bills retain the good cause requirement for eviction actions during lease terms in public housing and Section 8 housing. For evictions based on non-payment of rent, the bills provide a 14-day notice period. A 14-day notice (or that required by state law, whichever is less) is required for evictions where health or safety threats are involved.
The bills prescribe tough eviction standards for criminal activity. Tenants can be evicted from public housing for criminal activities committed by household members either within or outside the public housing development. Those evicted because of criminal activity can be denied re-admission for three years under the House bill and can be kept out for a “reasonable period” under the Senate language.

The grievance procedure remains substantially intact in the House bill. Both measures also provide a grievance procedure for tenants affected by sanctions due to an alleged violation of welfare rules. Essentially, the grievance procedure remains available in all public housing eviction cases other than those involving drug-related criminal activity or activities that threaten other tenants or PHA employees.

Grams Amendment

Both bills enhance PHAs’ arsenal of tools to screen out people with histories of substance or alcohol abuse or involvement in criminal activity. Besides H.R. 2’s  three-year bar on those previously evicted from federally assisted housing for such reasons, the bill would allow PHAs (and Section 8 owners) to set a period of ineligibility for those evicted for less serious lease violations. Those convicted of intent to sell drugs after H .R. 2’s enactment would be barred from admission. S. 462 also imposes a three-year bar for drug-related crime in the absence of completion of a PHA-approved rehabilitation program.

One of the Senate bill’s most contentious issues has been the Grams amendment, which requires that applicants for public and assisted housing sign an authorization for drug treatment centers to release information related to whether they currently use illegal drugs. Named for its sponsor, Senator Rod Grams (R-MN), the legislation grew out of a Minneapolis case in which an applicant was denied housing assistance after admitting he received treatment for substance abuse. The controversy centered around how to protect medical records’ privacy and prevent discriminatory application of the provision.

Despite unanimous opposition by the nation’s leading associations of health care providers, the Grams amendment was passed by unanimous consent with the rest of the bill. Now housing subsidies can be added to the list of government benefits, along with welfare and food stamps, denied to those convicted of felonies involving illegal drugs.

Resident Opportunity

The House bill authorizes a Resident Opportunity Program, mainly to encourage resident management of public housing developments. Funding would only be available to resident councils that approve formation of a resident management corporation (RMC). This program would funnel dollars for technical assistance to increase management capacity and also to identify and address residents’ social support needs and carry out economic empowerment activities like job training.

The Committee Report notes that this program is authorized despite the waste and fraud associated with its predecessor, the Tenant Opportunity Program (TOP). This program, however, would be an inadequate substitute for TOP, which focuses more generally on supportive services, general organizing and education programs, and economic empowerment. The program would be funded at $15 million for one year and thereafter treated as an eligible activity for Operating Funds.

The Senate bill provides $25 million in direct funding to resident councils, organizations, and management corporations, and even nonprofit entities supported by residents, for “programs of supportive services and resident empowerment activities to assist public housing residents in becoming economically self-sufficient.” Along with resident management activities, eligible activities include physical improvements to provide space for supportive services; provision of service coordinators; job training and supportive services for those moving into jobs; economic development initiatives such as new resident microenterprises, community credit unions, and revolving loan funds; and other activities designed to improve residents’ economic self-sufficiency.

Participation in PHA Plans

Both bills contain limited provisions for resident participation in developing plans to spell out all aspects of operations. These PHA plans are to be filed with HUD, but HUD’s review of the plans is generally limited to determining whether they contain the required information consistent with information available to HUD. The House bill identifies the local Consolidated Plan as an appropriate source of information in identifying local needs and priorities. The Senate measure provides a somewhat more general directive requiring that PHA plans be consistent with the Consolidated Plan. It vests virtually every aspect of PHA policy in the PHA plan, including how a PHA will create an income mix within each project and its scattered site developments.

Both bills require a public hearing to obtain comments on PHA plans. The Senate bill requires that residents’ comments be considered in preparing final plans and that a summary of those comments be attached. It also requires PHAs to establish advisory boards of public housing and Section 8 residents to comment on their plans. The resident advisory board recommendations would be attached to submitted plans, along with an explanation of how the plan addresses those comments. However, a limited number of tenants can serve on resident advisory boards, and only for a short period of time.

Public/Private Partnerships

The House and Senate legislation encourage PHAs to form partnerships and launch new initiatives. The House bill’s Home Rule Block Grants provide the maximum amount of local flexibility. These grants would authorize localities to receive all public housing and rental assistance in a single grant. Local governments would design programs and select administering entities. PHAs would be required to comment on the plan, but local government could designate another entity to administer the block grant. HUD would review and approve the programs, and localities would have to provide housing to the same number of households and implement “reasonable” rent policies. Many federal statutes and regulations would be waived, and in their place would be general directives in such areas as citizen participation. Although the bill requires jurisdictions to hold public hearings before submitting an application, it contains scant reference to ongoing resident participation in the programs designed by each jurisdiction. Once approved to receive this grant, localities would receive as much money as they obtained through categorical programs. The HUD Secretary is to monitor participating jurisdictions’ performance.

The House Committee Report is very enthusiastic about localities’ ability to design housing programs that more effectively use federal assistance and are better coordinated with other priorities like welfare reform. However, many remain concerned that such plans would be designed and implemented with very little consideration to the unmet needs of extremely low-income families, the homeless, and the disabled.

The Senate bill also grants a great deal of flexibility to form partnerships with other entities, but keeps PHAs in the loop as the recipient agency for federal housing dollars. PHAs could form consortia or even merge with other PHAs to carry out administrative/management functions. The bill also allows joint ventures with other units of local government or private entities to carry out a broad range of activities. The bill eliminates the current law reducing PHAs’ operating subsidies in cases of increased earnings and allows them to keep these resources to invest in more low-income housing or other programs to benefit residents. The House bill also includes a provision for development of mixed-finance housing, which can be carried out in accordance with a HUD-approved mixed-finance plan.

While encouraging entrepreneurial activities is certainly desirable, some fear that, again, pressure to meet federal budget shortfalls through partnerships could result in fewer units and services going to the lowest-income residents, and could permanently change the occupancy and focus of the public housing program.

Despite the many contentious issues that remain, a successful conference on public housing reform looks more likely in this Congress than the last. Though no action is expected in 1997, Congress will still have 1998 to hammer out a consensus bill and get the measure passed. Both sides have already signaled a willingness to move toward each other. For example, the house provision on rents retains the Brooke Amendment, and the Senate has a small demonstration program which resembles the Flexible Home Rule Block Grants. Moreover, resolution of the mark-to-market issue in the appropriations bill eliminates the debate over another contentious housing issue.

While PHAs and communities prepare to use the added authority and flexibility devolved to them under these measures, it will take longer to tell if this flexibility truly creates a better program and better opportunities and communities for those with the greatest needs.

Parts of this article are excerpted from “What Is the 105 Congress Doing on Housing? A Legislative Update,” from Housing Law Bulletin, vol. 27, August 97.

 

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