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Thursday, Oct. 21, 2004 11:23 pm

The unkindest cuts

The Springfield Housing Authority was warned months ago that funding for its Section 8 housing-voucher program would be severely reduced. But hundreds of local landlords who are involved in the program only recently discovered that they are the ones being squeezed.

SHA says landlords have already begun to drop out of the program due to controversy over the funding cuts and confusion over how the cuts will be implemented.

Some experts saythe federal-funding cuts will lead to mass evictions and a possible surge in homelessness across the country. In Springfield, as many as 380 low-income families -- most consisting of single mothers with children -- could have their housing vouchers revoked.

In recent years, Section 8 has surpassed public housing as Springfield's largest program for sheltering low-income families. The program enrolls some 800 landlords and serves 1,844 families who pay about 30 percent of their income in rent. The federal government picks up the rest of the tab.

Rumors have long circulated of the Bush administration's plans to slash Section 8 funding, says SHA executive director Willis Logan. Though he learned of the cuts this spring, Logan did not warn program participants until recently.

Logan blames the U.S. Department of Housing and Urban Development, which, he says, has released a series of mixed and muddled messages. Local landlords, some of whom have been asked to reimburse SHA for thousands of dollars, are steamed that they were not informed of the budget crunch sooner.

On one point, however, everyone involved agrees: Unless HUD restores the funding, the city's poorest families will be in trouble.

"Will it mean more homeless people in Springfield?" asks Logan. "I hope not, but I fear the worst."

News of Section 8 funding cuts first appeared in a nine-page letter from HUD dated April 22. The document, written in dense bureaucratic jargon that even Logan says he found difficult to understand, was mailed to some 2,400 housing authorities across the country.

Although Congress last year provided an additional $1 billion to fund Section 8, the April letter announced a policy change enabling HUD to cut the money.

On the basis of the congressional appropriation, SHA had budgeted $11 million for Section 8 for calendar year 2004. HUD action, however, reduced that to $8.5 million, according to SHA director of finance and administration Doug Warren.

Worse still, the funding was cut retroactively -- meaning that SHA would have to recover money it had already paid landlords. This proved problematic for SHA, which already had been writing checks to Section 8 landlords for several months.

Logan later received another letter from HUD, dated May 24, that charted a new funding formula for how much money SHA would be allowed to pay landlords, on average, per Section 8 unit. Including a minimal inflation increase, it amounted to $378.09 -- a 7 percent reduction from what SHA had budgeted.

Housing authorities were given the option of appealing the inflation percentages factored into these amounts. Surprisingly, though many housing authorities faced shortfalls, fewer than 400 nationwide bothered to appeal.

That's because most housing authorities, like Springfield's, are relatively short-staffed and have no in-house attorneys, according to Will Fischer, housing-policy analyst for the Washington, D.C.-based Center on Budget and Policy Priorities. SHA has an attorney on retainer, but Logan says he took no action because a change in the inflation rate would have had little impact."HUD didn't do a very good job of getting information out to people," says Fischer, adding that housing authorities were only given a three-week window in which to file appeals.

Indeed, information has moved at a snail's pace at virtually every level.

Local landlords were not officially informed of the cuts until earlier this month. A one-page letter signed by Logan and dated Oct. 4 announced that payments would be reduced by 7 percent retroactive to Jan. 1.

That directive meant landlords would be required to reimburse 7 percent of all rent money they received from SHA during the previous 10 months.

"This unexpected change in the middle of our fiscal year catches all off guard, without sufficient times [sic] and resources to plan for implementation of a new policy," the letter states.

The week before the letter was issued, dozens of landlords attended a Section 8 workshop sponsored by SHA at Lincoln Library. There, attendees were warned of problems with the program, though no specifics were given. Some say they felt misled by SHA because the agency was not being more forthcoming.

"Normally when you think of cutbacks, you think the future," says Warren Stiska, treasurer of the roughly 100-member Springfield Area Landlords Association. Stiska says the proposal to make the cuts retroactive was a "total shock," and would prompt landlords who accept housing vouchers to drop out.

Springfield landlord John Vaughn, who rents 16 units to families who use housing vouchers, says he would have to reimburse more than $5,000 under SHA's plan. He has consulted a lawyer about SHA's plan to require reimbursements.

Some Illinois housing authorities have already been sued by landlords because of Section 8 cuts. Among those hardest hit include the Madison County Housing Authority and the Elgin Housing Authority.

Logan says he is now waiting on orders from HUD, which has instructed him to not take further action against landlords. Still, he says he expects to cut heavily into Section 8 payments, though he admits that will inevitably lead to evictions.

"If the landlord's expenses go up, the rent goes up," says Logan. "There's nothing we can do to landlords that won't affect residents, too, eventually."

Local families renting multiple-bedroom units are most likely to be pinched, says SHA finance director Warren.

For instance, the federal government pegs the current fair market rent for a three-bedroom apartment in Springfield at $738 a month.Of this amount, tenants who participate in Section 8 pay, on average, $127.50, leaving SHA to pay landlords the remaining $610.50. Now, though, HUD will only cover $378.09, leaving landlords with a major loss in revenue.

The bigger the apartment, says Warren, the greater the shortfall. In Springfield, the vast majority of Section 8 tenants rent units with at least two bedrooms.

Anticipating a shakeup in the program, Warren says, SHA leaders have considered moving Section 8 tenants into public housing. But he says of the roughly 1,000 public-housing units managed by SHA, only single-bedroom units have vacancies.

There is no funding, he says, to reconfigure apartments to accommodate families.

Logan becomes despondent when discussing the budget cuts, complaining that the overall SHA budget has been slashed by 50 percent in the eight years since he took over the agency.

An affordable-housing crisis in this country, he says, gets scant attention: "You didn't hear the word 'housing' in any of the presidential debates."

Housing advocates say they expect even deeper cuts to Section 8 under the Bush administration, which intends to reduce funding of the program by 12 percent by 2005 and 30 percent by 2009, according to the Washington D.C.-based National Low Income Housing Coalition.

Currently two separate appropriations bills for HUD funding are in Congress, though a new fiscal-year 2005 budget will not be approved until after the November election.

Anticipating more funding cuts, Logan says the outlook for Section 8 has become increasingly bleak:

"First we saw the demise of public housing. Now it's the demise of Section 8."

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