Landlords who provide subsidized housing in Raleigh face a choice: Accept a cut of up to $100 in monthly rent payments or tell their low-income tenants to find a new home.
That’s how the Raleigh Housing Authority, which manages thousands of Section 8 vouchers in the city and Wake County, is responding to a $1.6 million drop in federal funding. The cuts are part of sequestration, the automatic drop in federal spending that began in March. It’s taken months for the cuts to filter down to local agencies like the housing authority.
The authority’s executive director Steve Beam said cutting landlord payments is the least painful way to address the 12 percent shortfall in Section 8 funding for the rest of 2013. He says the U.S. Department of Housing and Urban Development also suggested reducing the number of voucher recipients or cancelling a month’s rent payment.
“It’s a matter of which bad course do you take,” Beam said. “I was not willing to make a decision to start kicking people off the program.”
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But some leaders in Southeast Raleigh – which has a high concentration of subsidized housing – aren’t happy with Beam’s approach to cutting rent payments. Danny Coleman, chairman of the South Central Citizens Advisory Council, said each landlord’s payment should be cut by the same percentage.
“I would think it would be easier to bear if we were all taking the hit at the same rate,” he said.
Instead, the authority has a complicated process for determining new payments – Beam said federal regulations prohibit the approach Coleman described. Each year as landlord contracts come up for renewal, the agency looks at three comparable unsubsidized rental properties – one in the same zip code and two in neighboring ZIP codes. In the past, RHA has used the median rent from those comparisons; since the sequestration cuts hit in May, it bases landlord payments on the lowest rent of the comparable properties. The authority hasn’t compiled figures on the average decrease, Beam said.
Landlords get a week to agree to the lower payments or drop out of the voucher program; Beam says he doesn’t yet have numbers on how many are cancelling. If they leave Section 8, their tenant has 30 days to move out and find Section 8 housing elsewhere. That means the renter will bear the brunt of the funding cuts, Coleman says.
“Where is the tenant going to get the money to move?” he said.
Section 8 landlords say the decision will be tough. John Schlimme owns several houses in Southeast Raleigh; the rent on one property will be cut from $850 to $762. He’s not sure how he’ll respond.
“Most of the landlords are going to really think about whether they’re going to renew the lease,” Schlimme said. “You have to look at it from a business standpoint.”
In Durham, landlords won’t see a change. Durham Housing Authority CEO Dallas Parks said he’s chosen other ways to address a $2 million cut in Section 8 funding. He’s against cutting payments to property owners. “I call that the death penalty – we don’t want to do it,” Parks said. “We don’t want to take any money away from anybody. We want to take the path of least resistance.”
Instead, Durham’s Authority has frozen new applications for housing vouchers. Up to 200 recipients leave the program each year, and until the sequester is lifted, their slots in the program won’t be available. Even before the move, Parks said 2,000 people are waiting for a voucher in Durham.
Raleigh’s Beam said he doesn’t want to reduce the number of vouchers available. “We are trying to house as many families as possible,” he said.
The Durham agency has also cut three of 18 positions, and employees are taking seven furlough days and leaving early on Wednesdays. Parks also has pulled $1 million from funding reserves.
“We’re down to almost the bone here,” Parks said.
In Raleigh, neighborhood leaders want the Raleigh Housing Authority to consider all its options to cope with the sequester – and give the public a chance to weigh in.
“RHA should never have been left on their own to make this kind of decision,” said Octavia Rainey, a frequent advocate for Southeast Raleigh. “This was never brought before the city council, and that proves that the city council is out of touch with RHA.”
The mayor appoints the authority’s seven-member board, and Rainey thinks more Section 8 renters should be appointed to oversee the agency.
“Who is looking out for the less fortunate?” Rainey said. “Who is their advocate?”