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L.A. County to Cut Rental Grants

The Housing Authority expects a $13.4-million shortfall from HUD for subsidies to low-income families. The reductions will be phased in.

August 01, 2004|Jocelyn Y. Stewart | Times Staff Writer

Faced with an estimated $13.4-million shortfall, the Los Angeles County Housing Authority is reducing the amount of monthly assistance it offers low-income families whose rents are subsidized by the federal government.

The move means some poor families will eventually pay higher rents or possibly lose their housing.

The change in the Section 8 program, a federal initiative administered by the county, will be phased in. Beginning Sept. 1, the county will begin cutting back subsidies for Section 8 families who move and those who have not yet entered into a contract with an owner. The reduced subsidies will affect other families over the next two years.

County officials could not say how many participants will be affected by the change. The agency administers about 20,300 vouchers, which provide subsidized housing for about 56,500 poor people.

The move was prompted by a federal policy change that has left many housing authorities across the nation in the red. In April, the Department of Housing and Urban Development changed the formula used to calculate how much funding local agencies receive. As a result, agencies have less money.

"We have to reduce our subsidy because we have reduced funds from HUD," said Bobbette Glover, assistant executive director of the Los Angeles County Housing Authority. "We have less money to go around to the same number of families."

In an open letter sent to housing authority officials July 22, HUD Secretary Alphonso Jackson acknowledged the problems faced by housing authorities across the nation, but said the program costs too much and that the changes in the funding formula were mandated by Congress.

"HUD can only spend the money that Congress allocates the department," he wrote. "Congress was very clear in its direction, and we are following its instructions exactly as the law requires. To those of you who are facing funding shortfalls, I want to assure you that we will assist in any way that we can in adjusting to the new funding requirements."

Advocates for the poor say the new funding policy is leaving the nation's neediest families literally on the streets or in shelters. They argue that HUD has the necessary funds but is refusing to release them, forcing housing authorities to freeze vouchers, reduce subsidies or cut families from the program.

"It's really disheartening to hear that the county is facing the same crisis the city has gone through," said Bob Erlenbusch, executive director of the Los Angeles Coalition to End Hunger & Homelessness. "It really places a burden on low-income people once again and makes it even harder to find a low-income place to live and prevent becoming homeless."

Under Section 8, a low-income family or individual pays about 30% of their overall income toward rent. The federal government pays the rest.

That subsidy will be reduced in Los Angeles County because on July 20 the Board of Supervisors approved new "payment standards." A payment standard essentially caps the amount a Section 8 owner can receive when the subsidy is combined with the tenant's contribution. Lowering a payment standard can lower a tenant's subsidy.

For example, under the previous system, a family that contributed $265 to the monthly rent received a subsidy of about $858 for a two-bedroom apartment. Under the new rules, the same family would receive a subsidy of $756, leaving it responsible for an additional $102.

The family would have to pay the $102 or ask the landlord to lower the rent.

In an effort to save money, the agency will take a closer look at households claiming to have college students because those households can receive a greater subsidy. Only the first $480 of a working student's monthly earnings is included in the family's overall income. In the past, the housing authority did not check whether students completed their classes and thus qualified for the benefit. Now students will have to prove they completed their classes.

In the case of new contracts, the county will reduce the rents some owners can charge by using a more conservative method of calculating rents. In the past, rents were based on an average of the three highest rents in a census tract. Now the rents will be determined by an average of all rents within a census tract.

Arnie Corlin of the Apartment Assn. of Greater Los Angeles, said the changes may make it unfeasible for some apartment owners to participate in Section 8, particularly the "mom and pop" owners.

"If somebody buys something for $3, how can you sell it for $2 at a profit?" Corlin said. "There are many owners currently who are in financial crisis because of the issues with Section 8. People could very well lose their properties."

The changes are not widely known outside government. The county has held focus groups, but has not sent a letter explaining the changes to the thousands of affected owners or tenants. The information will be included in an upcoming newsletter.

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