Affordable Housing in Crisis--Again

As we pointed out in the last post, costs that affect us most, like rent, and over which we have the least control have been skyrocketing while our wages remain stagnant or fall behind the inflation rate (which should tell you how little we make and how rarely we get raises--and how tiny they are when we do--because the inflation rate is so low). One of the few Federal programs to survive the Republicans' relentless war on the poor is the Section 8 Housing Subsidy program. Well, now they're going after it, too.

House Republicans who authorized cuts in federal housing subsidies for the poor are now fuming over the bad publicity about the cuts. It's strange that anyone was surprised at the negative reaction. The cuts place tenants in some cities at risk of losing subsidized housing, and financial institutions are beginning to express doubts about continuing to participate in the kinds of development projects that have built much of the nation's affordable housing.

If the lawmakers really regret the damage they have done, there is still time for them to undo it. The recent promise by the Department of Housing and Urban Development to shovel an extra dollop of money into the current program won't do the trick. HUD needs to rethink its hostile approach to paying for the critical Section 8 program, which furnishes rent subsidies for two million of the country's most vulnerable families.

Section 8 has survived the generation-long assault on public housing because it is based partly in the private sector. Rather than building affordable housing itself, the government has guaranteed subsidies for rents in the private market. Families, most of them living at or below the poverty level, pay 30 percent of their incomes toward rent, and Section 8 vouchers pay the remainder. Developers used the Section 8 guarantees as backing when they raised money for low- or mixed-income developments.

But despite its theoretical commitment to the private market, HUD has gotten tired of meeting the fast-rising housing prices in some markets. It announced recently — with Congressional blessing — that it would no longer pay the full cost of the vouchers. It froze federal funds at the level of August 2003, plus an adjustment for inflation.

This is a tactic the Bush administration has used in other areas as it tries to halt open-ended commitments for federal funds in favor of set block grants. A "block grant," however, is simply a cut by another name. Neither the poor nor the local housing authorities have the power to make rents conform to those dictates. In high-cost areas like New York and San Francisco, officials will have trouble finding landlords and builders who will accept Section 8 tenants because the vouchers will no longer provide a predictable level of support. Families who have been lucky enough to get Section 8 help may wind up having to pay more rent.

Perhaps worst of all, the financial community has begun to react. A New England bank has scrapped an innovative home mortgage program aimed at promoting home ownership through Section 8. Wall Street bond traders have warned that the cuts could cause the bond market to lose faith in Section 8-related programs, undermining the bonding process that makes it possible to build affordable housing.

The incomes of the poor do not expand just because real estate values do. If these ill-advised cuts are allowed to stand, a public-private partnership that has been producing affordable housing since the Nixon years will wither and die.

(emphasis added)